2014 C L D 390
2014 C L D 390
[Lahore]
Before Muhammad Khalid Mehmood Khan and Shujaat Ali Khan, JJ
NISAR AHMED AFZAL---Appellant
Versus
MUSLIM COMMERCIAL BANK through Assistant Vice-President/Chief Manager and 14 others---Respondents
F.A.Os. Nos.140 of 2007, 114 of 2008 and C.R. No.156 of 2008, heard on 6th February, 2013.
(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---
----S. 9---Civil Procedure Code (V of 1908), S. 12(2)---Suit for recovery of bank loan---Application for setting aside ex parte decree--- Maintainability--- Auction of suit property by the Banking Court---Contention of applicants was that they were bona fide purchasers of the property in question---Banking Court dismissed application filed under S.12(2), C.P.C. summarily---Validity---Provisions of S.12(2) were made part of Civil Procedure Code, 1908 by withdrawing the right of a suit of aggrieved party challenging the decree on the ground of fraud---Section 12(2), C.P.C. was applicable to the proceedings arising under Financial Institutions (Recovery of Finances) Ordinance, 2001---Application under S.12(2), C.P.C. was maintainable in appropriate cases---Possession of suit property was with the applicants---Applicants purchased the suit property through registered sale deed against consideration---Mortgagor or his tenant or representative of mortgagor was not in possession of the mortgaged property---Trial Court could only transfer the symbolic possession under O.XXI, R.96, C.P.C. to the auction purchaser---Warrant of possession against the mortgagor was issued by the Trial Court but applicants were dispossessed from the suit property---Applicants filed application under S.12(2), C.P.C. on coming to know about the sale of suit land---Applicants had the right to challenge the decree and to get the property redeemed---Banking Court was bound to hold inquiry whether the decree was rightly passed or not and the applicants were bona fide purchasers for value without notice or not---Applicants had given the particulars of fraud in their application which required the detailed inquiry---Impugned orders were set aside in circumstances---Application under S.12(2), C.P.C. would be deemed to be pending before the Banking Court which should be decided after framing of issues and recording of evidence.
Messrs Dadabhoy Cement Industries Ltd. and 6 others v. National Development Finance Corporation Karachi PLD 2002 SC 500 rel.
(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---
----S. 7(a)--- Power of Banking Court--- Scope--- Banking Court had all the powers vested in civil court under Civil Procedure Code, 1908 in exercise of civil jurisdiction.
(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---
----S. 7(2) & Preamble---Procedure to be followed by the Banking Court---Scope---Financial Institutions (Recovery of Finances) Ordinance, 2001 was a special law enacted for the resolution of disputes between the customer and Financial Institution--- Courts established under the Ordinance were having the jurisdiction of civil and criminal courts---Banking Court would follow the procedure as laid down in the Civil Procedure Code, 1908 where same had not been provided in the Financial Institutions (Recovery of Finances) Ordinance, 2001---Provisions of Criminal Procedure Code, 1898 would be applicable in criminal jurisdiction if special procedure was not available under the Ordinance.
(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---
----Ss. 27 & 22---Civil Procedure Code (V of 1908), Ss. 10 & 12(2)---Order of Banking Court---Scope---No court or any other authority subject to S.22 of the Ordinance, had jurisdiction to revise, review, or call in question any proceedings, judgment, decree or order of Banking Court---No appeal, review or revision would lie against an order accepting or rejecting an application for leave to defend or any interlocutory order of Banking Court which did not dispose of the entire case other than order passed under subsection (11) of S.15 or subsection (7) of S. 19 of the Ordinance---Section 10, C.P.C. would not apply on the suit filed under the Ordinance, however the applicability of S.12(2), C.P.C. had not been debarred under the said Ordinance.
(e) Civil Procedure Code (V of 1908)---
----S. 12(2)---Bar to further suit---Scope---Provision of S.12(2) was made the part of Civil Procedure Code, 1908 by withdrawing the right of a suit of the aggrieved party challenging the decree on the ground of fraud.
Syed Najmal Hassan Kazmi, Imran Muhammad Sarwar and Shahid Ikram Siddiqui for Appellant.
Imran Aziz Khan and Khurram Raza for Respondents.
Date of hearing: 6th February, 2013.
JUDGMENT
MUHAMMAD KHALID MEHMOOD KHAN, J.---Through this single judgment, we propose to decide F.A.O. No.140 of 2007, F.A.O. No.114 of 2008 and C.R. No.156 of 2008.
The appellants of both the appeals are claiming the joint property auctioned in execution of decree passed in favour of Muslim Commercial Bank Limited against respondents and the civil revision has also arisen out of order dated 23-1-2008.
2. The respondent No.1 filed a suit for recovery of Rs.13,543,505 against respondents Nos.2 to 13 asserting that respondent No.2 availed financial facilities from respondent No.1. The respondents Nos. 3 to 14 executed agreement of personal guarantees and mortgaged their properties, detailed in the plaint, for securing the financial facilities availed of by the respondent No.2. The respondents filed PLA including respondent No.14. On 3-5-2005, the respondent No.14's PLA was dismissed for non-prosecution and the learned Banking Court on 3-5-2005 decreed the suit against respondents Nos.3, 4 and 14. In execution of decree on 26-8-2006, the respondent No.14's property was auctioned and finally confirmed in favour of respondent No.15 on 26-8-2006 against his bid of Rs.56,200,000. After confirmation of sale, the respondent No.15 filed an application for reducing the price of auctioned property as according to him the measurement of property is not according to the proclamation of auction. The learned Banking Court on 14-11-2006 accepted the application and allowed the respondents No.15 to withdraw an amount of Rs.16,325,265. The respondent No.15 on 17-11-2006 took the possession of auctioned property by dispossessing the appellants.
3. The appellants then filed applications under section 12(2), C.P.C. claiming that they purchased the auctioned property from respondent No.14 vide sale deed registered on 2-3-2002 with the Sub-Registrar, Lahore. The appellants challenged the ex parte decree dated 3-5-2005 alleging that decree is an outcome of fraud and misrepresentation. The Learned Banking Court through impugned order dated 19-12-2006 dismissed the appellants' applications summarily; hence the present appeals.
4. Learned counsel for appellants submits that admittedly the appellants have purchased the auctioned property through registered sale deed, they were in possession of the said property, the mortgage in favour of respondent No.2 is fraudulent, the respondent No.14 and respondent No.2 colluded with each other caused loss to the appellants, the appellants are bona fide purchasers for value without notice. The respondent No.14 intentionally and with the connivance of respondent No.2 firstly filed application for permission to defend the suit and then got it dismissed for non-prosecution only to usurp the appellants' property. Learned counsel contends that without recording the evidence the application under section 12(2) Code of Civil procedure could not be dismissed. Learned counsel has relied on Muhammad Yaqoob and others v. Messrs United Bank Limited and others (2007 CLD 683), Messrs Dadabhoy Cement Industries Ltd. and 6 others v. National Development Finance Corporation Karachi (PLD 2002 Supreme Court 500), Khairpur Textile Mills Ltd. and 7 others v. National Bank of Pakistan and another (2003 CLD 326 (Karachi), Messrs Safa Textile Ltd. v. Messrs Habib Bank Ltd. and 3 others (2004 CLD 279), Abdul Basit Zahid and another v. Modaraba Al-Tijarah and another (2002 CLD 46 Karachi), Messrs Tawakkal Export Corporation and 5 others v. Muslim Commercial Bank Ltd. (1997 CLC 1342), Mian Munir Ahmed v. United Bank Limited and 3 others (PLD 1998 Karachi 278), Pakistan Industrial Credit and Investment Corporation Limited, Peshawar Cantt. and others v. Government of Pakistan through Collector Customs, Customs House, Jamrud Road, Peshawar and others (2002 SCMR 496) Karamat Hussain and others v. Muhammad Zaman and others (PLD 1987 Supreme Court 139), Muhammad Ayub and 4 others v. Dr. Obaidullah and 6 others (1999 SCMR 394), Misbah ul Haq and another v. National Bank of Pakistan though Regional Head-B and 2 others (2002 YLR 3239), Muhammad Shafique v. Saeed Akhtar (2003 CLC 1274), Tayab and others v. Muhammad Siddiq and 10 others (2006 YLR 111) and Investment Corporation of Pakistan and 5 others v. Judge Banking Court No.1, Multan and 9 others (2006 CLD 1161).
5. Learned counsel for auction purchaser submits that auction purchaser has purchased the property in open auction, the Court auctioned the property after completing all legal formalities and as such he has acquired vested right in the property. The property auctioned was mortgaged with respondent No.2, the respondent No.2 after obtaining the decree from the competent court of law has rightly auctioned the property through court. Learned counsel submits that even if for the sake of arguments it is assumed that respondent No.14 has committed any fraud with appellants, the appellants may recover the loss or damages if any from respondent No.14. The sale in favour of respondent No.15 has become absolute and could not be set aside. Learned Counsel urged that the court auctioneer sold the property as per detail given in the proclamation and when the actual measurement was found less than the declared measurement, he rightly filed an application for refund of excess amount. Lastly adds that application under section 12(2), C.P.C. was not maintainable under the Financial Institutions (Recovery of Finances) Ordinance 2001 likewise the appeal is also not maintainable. Learned counsel has relied on Messrs Gold Star International and another v. Muslim Commercial Bank Ltd. (2000 MLD 421).
6. Learned counsel for respondent No.1 submits that respondent No.14 mortgaged the property in favour of respondent No.1 for securing the facility availed of by respondent No.2. The respondent No.14 filed PLA but failed to prosecute his PLA and the court has rightly passed the decree in its favour and auctioned the mortgaged property after decree. Learned Counsel urged that under Special Law, the application under section 12(2), C.P.C. is not maintainable and the appeal is liable to be dismissed being not maintainable.
7. We have heard the learned counsel for the parties and examined the record with the assistance of learned counsel for the parties.
8. The first argument of learned counsel is that the Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter referred to as the F.I.O., 2001) is a Special Law and section 12(2) Code of Civil procedure is not applicable under the Special Law as it overrides the other laws.
9. For appreciating the argument of learned counsel for the respondents, section 4 of the F.I.O., 2001 is reproduced as under;
"Ordinance to override other laws. The provisions of this Ordinance shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force."
10. Section 7 (a) of the F.I.O., 2001 provides that in exercise of civil jurisdiction, the Banking Court has all the powers vested in Civil Court under the Code of Civil Procedure.
11. Section 7(2) of the F.I.O., 2001 provides that a Banking Court shall in all matters where the procedure has not been provided in the Ordinance 2001 follow the procedure as laid down in the Code of Civil Procedure.
12. The F.I.O., 2001 is a Special Law enacted for the resolution of disputes between the customer and Financial Institution; the courts established under the Ordinance ibid are having the jurisdiction of civil and criminal both. Under section 7(2) the Banking Court has the powers of Code of Civil Procedure where the Ordinance does not provide any procedure; likewise in criminal jurisdiction if the special procedure is not available under the Ordinance 2001, the provisions of Code of Criminal procedure will be applicable. It is thus clear that where the Ordinance 2001 itself did not provide the specific procedure for resolving any dispute, the Code of Civil procedure will be fully applicable as per settled principle of law. Under Code of Civil Procedure, the Civil Court in addition to the powers under section 12(2), C.P.C. has the inherent powers to set aside, modify or correct the decree.
13. Section 27 of the F.I.O., 2001 provides as under;
"Finality of Order.--- Subject to the provisions of section 22, no Court or other authority shall revise or review or call, or permit to be called, into question any proceeding, judgment, decree, sentence or order of banking court or the legality or propriety of anything done or intended to be done by the Banking Court in exercise of jurisdiction under this Ordinance:
Provided that the Banking Court may, on its own accord or on application of any party, and with notice to the other party or, as the case may be, to both the parties, correct any clerical or typographical mistake in any judgment, decree, sentence or order passed by it."
14. The perusal of section 27 will show that no court or any other authority subject to section 22 of the F.I.O., 2001 has the jurisdiction to revise, review or call in question any proceedings, judgment, decree or order of Banking Court. The question thus is, if the customer and financial Institution obtained a decree by practicing fraud and misrepresentation especially when the aggrieved party is not the party to the proceedings or decree, what is the remedy of the aggrieved party.
15. Word used in the provision is "No Court or any other authority". The intention of legislator seems to be that the inherent jurisdiction of the Banking Court has not been ousted, otherwise the legislator can also mention the word "the Banking Court, no other court or any authority" in section 27 of the Ordinance ibid. This proposition also finds favour from the provision of section 22(6) of the F.I.O., 2001 which provides that no appeal, review or revision shall lie against an order accepting or rejecting an application for leave to defend, or any interlocutory order of the Banking Court which does not dispose of the entire case before the Banking Court other than order passed under subsection (11) of section 15 or subsection (7) of section 19 of the F.I.O., 2001. The legislator specifically debarred the appeal, review and revision against the order for rejecting or accepting the application for leave to defend the suit or any other interlocutory order of Banking Court which did not dispose of the entire suit except the order under section 15(11) and section 19(7). Likewise the F.I.O., 2001 specifically provides that provision of section 10 of the Code of Civil Procedure, 1908 on the suits filed under the Ordinance ibid will not apply but no specific provision is available in F.I.O., 2001 debarring the application under section 12(2) of the Code of Civil Procedure. The provision of section 12(2) was made the part of Code of Civil Procedure by withdrawing the right of a suit of the aggrieved party challenging the decree on the ground of fraud; hence the said provision is in addition to the inherent powers of the civil court, the logical conclusion of the above said discussion is that applicability of section 12(2) of Code of Civil Procedure has not been debarred under the F.I.O., 2001.
16. Learned Counsel for respondents have relied heavily on Messrs Dadabhoy Cement Industries Ltd. and 6 others v. National Development Finance Corporation Karachi (PLD 2002 SC 500) (supra).
In this case, a compromise decree was assailed under section 12(2), C.P.C., the learned Single Judge dismissed the application that against compromise decree the application 12(2), C.P.C. is not maintainable and in appeal the Hon'ble Supreme Court of Pakistan held as under;
"7. As far the allegations that the compromise decree was obtained by fraud, coercion and misrepre-sentation, the petitioners failed to substantiate the same as no particulars or details thereof had been given in their application under section 12(2), C.P.C. and mere allegation not supported by any material 'would not invariably warrant inquiry or investigation in each case. It is for the trial Court to see whether the facts and circumstances of the case require further probe into the allegations or not. Where the Court finds that further inquiry is required, it would frame issues and record evidence of the parties and if it is of the opinion that no inquiry is required, it can dispense with the same and proceed to decide the application. So, it is not incumbent on the trial Court to frame issues in each and every case but it depends upon the facts and circumstances of each case. The argument that the respondent by adding further interest/mark-up on the amount on which interest/mark-up had already been paid, played fraud has no substance for this fact was already in the knowledge of the petitioners as they had agreed to pay the same on rescheduling of the outstanding amount, which has been admitted by the petitioners in their Suit No.416 of 1996, as such, they being the privy to the rescheduling of the loan, cannot turn around to say that further mark-up was fraudulently charged. It is settled law that where allegation of fraud is levelled, it must be specified and details thereof should be given. The contents of MOU were mutually agreed upon between the parties and there is nothing to suggest that the same as executed by fraud, misrepresentation or under duress or coercion."
17. The above said judgment will show that the issue for maintainability of application under section 12(2), C.P.C. was not in issue rather the Hon'ble Supreme Court of Pakistan impliedly held that application under section 12(2), C.P.C. is maintainable.
18. For the foregoing reasons, we are of the firm opinion that the provisions contained in section 12(2), C.P.C. are applicable to the proceedings arising under the F.I.O., 2001; in the appropriate cases the application under section 12(2), C.P.C. is maintainable.
19. The respondent No.1 filed a suit against respondent No.2 being the customer and remaining respondents were arrayed as guarantors and mortgagors. The respondent No.1 claimed that respondent No.14 mortgaged the suit property as guarantor of respondent No.1, who is the customer, meaning thereby the claim of respondent No.1 against the suit property is of mortgage charge. The appellants' claim is that they are the bona fide purchaser for value against consideration without notice; the possession was admittedly with the appellants. It is an admitted fact on record that appellants purchased the property from respondent No.14 through a registered sale deed against consideration. The respondent No.1 filed suit for recovery of finance against the customer, its guarantors and mortgagors, respondent No.14 the alleged mortgagor filed application for permission to defend the suit but slipped from the court and his application was dismissed for non-prosecution, the learned Banking Court on the same day passed decree against respondents including the respondent No.14. The learned Trial Court after the confirmation of sale issued warrant of possession against the mortgagor but dispossessed the appellants. It is an admitted fact that mortgagor or his tenant or representative of mortgagor was not in possession of mortgaged property. The learned Banking Court thus can only transfer the symbolic possession under Order XXI, Rule 96, C.P.C. to the auction purchaser. On coming to know bout the sale of their property, the appellants filed application under section 12(2), C.P.C.
20. The learned Banking Court dismissed the appellants' application without even calling a reply holding as under:--
"10. Rana Nisar Afzal (the present objection petition) alleges that the property was never mortgaged by Munir Ahmed in favour of the bank but the said Munir Ahmed had not filed any application for restoration of his application for leave to defend the suit neither filed any application to have set aside the decree nor any objection petition in this regard rather has submitted application for refund of the excess amount. All these facts clearly prove that the property was mortgaged by Munir Ahmed with the bank in 1999 and the alleged sale in favour of Nisar Afzal even if valid is subject to mortgage and reliance in this regard is placed upon the law laid down by Hon'ble Supreme Court in (2002 CLD 1513)."
21. The impugned order shows that learned Banking Court has itself held that sale in favour of the appellants is subject to mortgage charge of the mortgagee, but the learned Banking Court inspite of giving above finding has dismissed the appellants' application. If the appellants have purchased the property with mortgage charge then the appellants have the right to challenge the decree and have the right to get the property redeemed. The appellants have challenged an ex parte decree being the owner of property; hence learned Banking Court was bound to hold inquiry whether the decree was rightly passed or not and the appellants are bona fide purchaser for value without notice or not. The appellants have given the particulars of fraud in their applications which require the detailed inquiry.
22. In view of the above, we allow the appeals, revision petition and set aside the impugned orders dated 19-12-2006 and 23-1-2008, consequently the appellants' applications under section 12(2), C.P.C. will be deemed to be pending and the learned Banking Court will decide the applications after framing the issues and recording the evidence.
AG/N-61/L Appeals accepted.
[Lahore]
Before Muhammad Khalid Mehmood Khan and Shujaat Ali Khan, JJ
NISAR AHMED AFZAL---Appellant
Versus
MUSLIM COMMERCIAL BANK through Assistant Vice-President/Chief Manager and 14 others---Respondents
F.A.Os. Nos.140 of 2007, 114 of 2008 and C.R. No.156 of 2008, heard on 6th February, 2013.
(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---
----S. 9---Civil Procedure Code (V of 1908), S. 12(2)---Suit for recovery of bank loan---Application for setting aside ex parte decree--- Maintainability--- Auction of suit property by the Banking Court---Contention of applicants was that they were bona fide purchasers of the property in question---Banking Court dismissed application filed under S.12(2), C.P.C. summarily---Validity---Provisions of S.12(2) were made part of Civil Procedure Code, 1908 by withdrawing the right of a suit of aggrieved party challenging the decree on the ground of fraud---Section 12(2), C.P.C. was applicable to the proceedings arising under Financial Institutions (Recovery of Finances) Ordinance, 2001---Application under S.12(2), C.P.C. was maintainable in appropriate cases---Possession of suit property was with the applicants---Applicants purchased the suit property through registered sale deed against consideration---Mortgagor or his tenant or representative of mortgagor was not in possession of the mortgaged property---Trial Court could only transfer the symbolic possession under O.XXI, R.96, C.P.C. to the auction purchaser---Warrant of possession against the mortgagor was issued by the Trial Court but applicants were dispossessed from the suit property---Applicants filed application under S.12(2), C.P.C. on coming to know about the sale of suit land---Applicants had the right to challenge the decree and to get the property redeemed---Banking Court was bound to hold inquiry whether the decree was rightly passed or not and the applicants were bona fide purchasers for value without notice or not---Applicants had given the particulars of fraud in their application which required the detailed inquiry---Impugned orders were set aside in circumstances---Application under S.12(2), C.P.C. would be deemed to be pending before the Banking Court which should be decided after framing of issues and recording of evidence.
Messrs Dadabhoy Cement Industries Ltd. and 6 others v. National Development Finance Corporation Karachi PLD 2002 SC 500 rel.
(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---
----S. 7(a)--- Power of Banking Court--- Scope--- Banking Court had all the powers vested in civil court under Civil Procedure Code, 1908 in exercise of civil jurisdiction.
(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---
----S. 7(2) & Preamble---Procedure to be followed by the Banking Court---Scope---Financial Institutions (Recovery of Finances) Ordinance, 2001 was a special law enacted for the resolution of disputes between the customer and Financial Institution--- Courts established under the Ordinance were having the jurisdiction of civil and criminal courts---Banking Court would follow the procedure as laid down in the Civil Procedure Code, 1908 where same had not been provided in the Financial Institutions (Recovery of Finances) Ordinance, 2001---Provisions of Criminal Procedure Code, 1898 would be applicable in criminal jurisdiction if special procedure was not available under the Ordinance.
(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---
----Ss. 27 & 22---Civil Procedure Code (V of 1908), Ss. 10 & 12(2)---Order of Banking Court---Scope---No court or any other authority subject to S.22 of the Ordinance, had jurisdiction to revise, review, or call in question any proceedings, judgment, decree or order of Banking Court---No appeal, review or revision would lie against an order accepting or rejecting an application for leave to defend or any interlocutory order of Banking Court which did not dispose of the entire case other than order passed under subsection (11) of S.15 or subsection (7) of S. 19 of the Ordinance---Section 10, C.P.C. would not apply on the suit filed under the Ordinance, however the applicability of S.12(2), C.P.C. had not been debarred under the said Ordinance.
(e) Civil Procedure Code (V of 1908)---
----S. 12(2)---Bar to further suit---Scope---Provision of S.12(2) was made the part of Civil Procedure Code, 1908 by withdrawing the right of a suit of the aggrieved party challenging the decree on the ground of fraud.
Syed Najmal Hassan Kazmi, Imran Muhammad Sarwar and Shahid Ikram Siddiqui for Appellant.
Imran Aziz Khan and Khurram Raza for Respondents.
Date of hearing: 6th February, 2013.
JUDGMENT
MUHAMMAD KHALID MEHMOOD KHAN, J.---Through this single judgment, we propose to decide F.A.O. No.140 of 2007, F.A.O. No.114 of 2008 and C.R. No.156 of 2008.
The appellants of both the appeals are claiming the joint property auctioned in execution of decree passed in favour of Muslim Commercial Bank Limited against respondents and the civil revision has also arisen out of order dated 23-1-2008.
2. The respondent No.1 filed a suit for recovery of Rs.13,543,505 against respondents Nos.2 to 13 asserting that respondent No.2 availed financial facilities from respondent No.1. The respondents Nos. 3 to 14 executed agreement of personal guarantees and mortgaged their properties, detailed in the plaint, for securing the financial facilities availed of by the respondent No.2. The respondents filed PLA including respondent No.14. On 3-5-2005, the respondent No.14's PLA was dismissed for non-prosecution and the learned Banking Court on 3-5-2005 decreed the suit against respondents Nos.3, 4 and 14. In execution of decree on 26-8-2006, the respondent No.14's property was auctioned and finally confirmed in favour of respondent No.15 on 26-8-2006 against his bid of Rs.56,200,000. After confirmation of sale, the respondent No.15 filed an application for reducing the price of auctioned property as according to him the measurement of property is not according to the proclamation of auction. The learned Banking Court on 14-11-2006 accepted the application and allowed the respondents No.15 to withdraw an amount of Rs.16,325,265. The respondent No.15 on 17-11-2006 took the possession of auctioned property by dispossessing the appellants.
3. The appellants then filed applications under section 12(2), C.P.C. claiming that they purchased the auctioned property from respondent No.14 vide sale deed registered on 2-3-2002 with the Sub-Registrar, Lahore. The appellants challenged the ex parte decree dated 3-5-2005 alleging that decree is an outcome of fraud and misrepresentation. The Learned Banking Court through impugned order dated 19-12-2006 dismissed the appellants' applications summarily; hence the present appeals.
4. Learned counsel for appellants submits that admittedly the appellants have purchased the auctioned property through registered sale deed, they were in possession of the said property, the mortgage in favour of respondent No.2 is fraudulent, the respondent No.14 and respondent No.2 colluded with each other caused loss to the appellants, the appellants are bona fide purchasers for value without notice. The respondent No.14 intentionally and with the connivance of respondent No.2 firstly filed application for permission to defend the suit and then got it dismissed for non-prosecution only to usurp the appellants' property. Learned counsel contends that without recording the evidence the application under section 12(2) Code of Civil procedure could not be dismissed. Learned counsel has relied on Muhammad Yaqoob and others v. Messrs United Bank Limited and others (2007 CLD 683), Messrs Dadabhoy Cement Industries Ltd. and 6 others v. National Development Finance Corporation Karachi (PLD 2002 Supreme Court 500), Khairpur Textile Mills Ltd. and 7 others v. National Bank of Pakistan and another (2003 CLD 326 (Karachi), Messrs Safa Textile Ltd. v. Messrs Habib Bank Ltd. and 3 others (2004 CLD 279), Abdul Basit Zahid and another v. Modaraba Al-Tijarah and another (2002 CLD 46 Karachi), Messrs Tawakkal Export Corporation and 5 others v. Muslim Commercial Bank Ltd. (1997 CLC 1342), Mian Munir Ahmed v. United Bank Limited and 3 others (PLD 1998 Karachi 278), Pakistan Industrial Credit and Investment Corporation Limited, Peshawar Cantt. and others v. Government of Pakistan through Collector Customs, Customs House, Jamrud Road, Peshawar and others (2002 SCMR 496) Karamat Hussain and others v. Muhammad Zaman and others (PLD 1987 Supreme Court 139), Muhammad Ayub and 4 others v. Dr. Obaidullah and 6 others (1999 SCMR 394), Misbah ul Haq and another v. National Bank of Pakistan though Regional Head-B and 2 others (2002 YLR 3239), Muhammad Shafique v. Saeed Akhtar (2003 CLC 1274), Tayab and others v. Muhammad Siddiq and 10 others (2006 YLR 111) and Investment Corporation of Pakistan and 5 others v. Judge Banking Court No.1, Multan and 9 others (2006 CLD 1161).
5. Learned counsel for auction purchaser submits that auction purchaser has purchased the property in open auction, the Court auctioned the property after completing all legal formalities and as such he has acquired vested right in the property. The property auctioned was mortgaged with respondent No.2, the respondent No.2 after obtaining the decree from the competent court of law has rightly auctioned the property through court. Learned counsel submits that even if for the sake of arguments it is assumed that respondent No.14 has committed any fraud with appellants, the appellants may recover the loss or damages if any from respondent No.14. The sale in favour of respondent No.15 has become absolute and could not be set aside. Learned Counsel urged that the court auctioneer sold the property as per detail given in the proclamation and when the actual measurement was found less than the declared measurement, he rightly filed an application for refund of excess amount. Lastly adds that application under section 12(2), C.P.C. was not maintainable under the Financial Institutions (Recovery of Finances) Ordinance 2001 likewise the appeal is also not maintainable. Learned counsel has relied on Messrs Gold Star International and another v. Muslim Commercial Bank Ltd. (2000 MLD 421).
6. Learned counsel for respondent No.1 submits that respondent No.14 mortgaged the property in favour of respondent No.1 for securing the facility availed of by respondent No.2. The respondent No.14 filed PLA but failed to prosecute his PLA and the court has rightly passed the decree in its favour and auctioned the mortgaged property after decree. Learned Counsel urged that under Special Law, the application under section 12(2), C.P.C. is not maintainable and the appeal is liable to be dismissed being not maintainable.
7. We have heard the learned counsel for the parties and examined the record with the assistance of learned counsel for the parties.
8. The first argument of learned counsel is that the Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter referred to as the F.I.O., 2001) is a Special Law and section 12(2) Code of Civil procedure is not applicable under the Special Law as it overrides the other laws.
9. For appreciating the argument of learned counsel for the respondents, section 4 of the F.I.O., 2001 is reproduced as under;
"Ordinance to override other laws. The provisions of this Ordinance shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force."
10. Section 7 (a) of the F.I.O., 2001 provides that in exercise of civil jurisdiction, the Banking Court has all the powers vested in Civil Court under the Code of Civil Procedure.
11. Section 7(2) of the F.I.O., 2001 provides that a Banking Court shall in all matters where the procedure has not been provided in the Ordinance 2001 follow the procedure as laid down in the Code of Civil Procedure.
12. The F.I.O., 2001 is a Special Law enacted for the resolution of disputes between the customer and Financial Institution; the courts established under the Ordinance ibid are having the jurisdiction of civil and criminal both. Under section 7(2) the Banking Court has the powers of Code of Civil Procedure where the Ordinance does not provide any procedure; likewise in criminal jurisdiction if the special procedure is not available under the Ordinance 2001, the provisions of Code of Criminal procedure will be applicable. It is thus clear that where the Ordinance 2001 itself did not provide the specific procedure for resolving any dispute, the Code of Civil procedure will be fully applicable as per settled principle of law. Under Code of Civil Procedure, the Civil Court in addition to the powers under section 12(2), C.P.C. has the inherent powers to set aside, modify or correct the decree.
13. Section 27 of the F.I.O., 2001 provides as under;
"Finality of Order.--- Subject to the provisions of section 22, no Court or other authority shall revise or review or call, or permit to be called, into question any proceeding, judgment, decree, sentence or order of banking court or the legality or propriety of anything done or intended to be done by the Banking Court in exercise of jurisdiction under this Ordinance:
Provided that the Banking Court may, on its own accord or on application of any party, and with notice to the other party or, as the case may be, to both the parties, correct any clerical or typographical mistake in any judgment, decree, sentence or order passed by it."
14. The perusal of section 27 will show that no court or any other authority subject to section 22 of the F.I.O., 2001 has the jurisdiction to revise, review or call in question any proceedings, judgment, decree or order of Banking Court. The question thus is, if the customer and financial Institution obtained a decree by practicing fraud and misrepresentation especially when the aggrieved party is not the party to the proceedings or decree, what is the remedy of the aggrieved party.
15. Word used in the provision is "No Court or any other authority". The intention of legislator seems to be that the inherent jurisdiction of the Banking Court has not been ousted, otherwise the legislator can also mention the word "the Banking Court, no other court or any authority" in section 27 of the Ordinance ibid. This proposition also finds favour from the provision of section 22(6) of the F.I.O., 2001 which provides that no appeal, review or revision shall lie against an order accepting or rejecting an application for leave to defend, or any interlocutory order of the Banking Court which does not dispose of the entire case before the Banking Court other than order passed under subsection (11) of section 15 or subsection (7) of section 19 of the F.I.O., 2001. The legislator specifically debarred the appeal, review and revision against the order for rejecting or accepting the application for leave to defend the suit or any other interlocutory order of Banking Court which did not dispose of the entire suit except the order under section 15(11) and section 19(7). Likewise the F.I.O., 2001 specifically provides that provision of section 10 of the Code of Civil Procedure, 1908 on the suits filed under the Ordinance ibid will not apply but no specific provision is available in F.I.O., 2001 debarring the application under section 12(2) of the Code of Civil Procedure. The provision of section 12(2) was made the part of Code of Civil Procedure by withdrawing the right of a suit of the aggrieved party challenging the decree on the ground of fraud; hence the said provision is in addition to the inherent powers of the civil court, the logical conclusion of the above said discussion is that applicability of section 12(2) of Code of Civil Procedure has not been debarred under the F.I.O., 2001.
16. Learned Counsel for respondents have relied heavily on Messrs Dadabhoy Cement Industries Ltd. and 6 others v. National Development Finance Corporation Karachi (PLD 2002 SC 500) (supra).
In this case, a compromise decree was assailed under section 12(2), C.P.C., the learned Single Judge dismissed the application that against compromise decree the application 12(2), C.P.C. is not maintainable and in appeal the Hon'ble Supreme Court of Pakistan held as under;
"7. As far the allegations that the compromise decree was obtained by fraud, coercion and misrepre-sentation, the petitioners failed to substantiate the same as no particulars or details thereof had been given in their application under section 12(2), C.P.C. and mere allegation not supported by any material 'would not invariably warrant inquiry or investigation in each case. It is for the trial Court to see whether the facts and circumstances of the case require further probe into the allegations or not. Where the Court finds that further inquiry is required, it would frame issues and record evidence of the parties and if it is of the opinion that no inquiry is required, it can dispense with the same and proceed to decide the application. So, it is not incumbent on the trial Court to frame issues in each and every case but it depends upon the facts and circumstances of each case. The argument that the respondent by adding further interest/mark-up on the amount on which interest/mark-up had already been paid, played fraud has no substance for this fact was already in the knowledge of the petitioners as they had agreed to pay the same on rescheduling of the outstanding amount, which has been admitted by the petitioners in their Suit No.416 of 1996, as such, they being the privy to the rescheduling of the loan, cannot turn around to say that further mark-up was fraudulently charged. It is settled law that where allegation of fraud is levelled, it must be specified and details thereof should be given. The contents of MOU were mutually agreed upon between the parties and there is nothing to suggest that the same as executed by fraud, misrepresentation or under duress or coercion."
17. The above said judgment will show that the issue for maintainability of application under section 12(2), C.P.C. was not in issue rather the Hon'ble Supreme Court of Pakistan impliedly held that application under section 12(2), C.P.C. is maintainable.
18. For the foregoing reasons, we are of the firm opinion that the provisions contained in section 12(2), C.P.C. are applicable to the proceedings arising under the F.I.O., 2001; in the appropriate cases the application under section 12(2), C.P.C. is maintainable.
19. The respondent No.1 filed a suit against respondent No.2 being the customer and remaining respondents were arrayed as guarantors and mortgagors. The respondent No.1 claimed that respondent No.14 mortgaged the suit property as guarantor of respondent No.1, who is the customer, meaning thereby the claim of respondent No.1 against the suit property is of mortgage charge. The appellants' claim is that they are the bona fide purchaser for value against consideration without notice; the possession was admittedly with the appellants. It is an admitted fact on record that appellants purchased the property from respondent No.14 through a registered sale deed against consideration. The respondent No.1 filed suit for recovery of finance against the customer, its guarantors and mortgagors, respondent No.14 the alleged mortgagor filed application for permission to defend the suit but slipped from the court and his application was dismissed for non-prosecution, the learned Banking Court on the same day passed decree against respondents including the respondent No.14. The learned Trial Court after the confirmation of sale issued warrant of possession against the mortgagor but dispossessed the appellants. It is an admitted fact that mortgagor or his tenant or representative of mortgagor was not in possession of mortgaged property. The learned Banking Court thus can only transfer the symbolic possession under Order XXI, Rule 96, C.P.C. to the auction purchaser. On coming to know bout the sale of their property, the appellants filed application under section 12(2), C.P.C.
20. The learned Banking Court dismissed the appellants' application without even calling a reply holding as under:--
"10. Rana Nisar Afzal (the present objection petition) alleges that the property was never mortgaged by Munir Ahmed in favour of the bank but the said Munir Ahmed had not filed any application for restoration of his application for leave to defend the suit neither filed any application to have set aside the decree nor any objection petition in this regard rather has submitted application for refund of the excess amount. All these facts clearly prove that the property was mortgaged by Munir Ahmed with the bank in 1999 and the alleged sale in favour of Nisar Afzal even if valid is subject to mortgage and reliance in this regard is placed upon the law laid down by Hon'ble Supreme Court in (2002 CLD 1513)."
21. The impugned order shows that learned Banking Court has itself held that sale in favour of the appellants is subject to mortgage charge of the mortgagee, but the learned Banking Court inspite of giving above finding has dismissed the appellants' application. If the appellants have purchased the property with mortgage charge then the appellants have the right to challenge the decree and have the right to get the property redeemed. The appellants have challenged an ex parte decree being the owner of property; hence learned Banking Court was bound to hold inquiry whether the decree was rightly passed or not and the appellants are bona fide purchaser for value without notice or not. The appellants have given the particulars of fraud in their applications which require the detailed inquiry.
22. In view of the above, we allow the appeals, revision petition and set aside the impugned orders dated 19-12-2006 and 23-1-2008, consequently the appellants' applications under section 12(2), C.P.C. will be deemed to be pending and the learned Banking Court will decide the applications after framing the issues and recording the evidence.
AG/N-61/L Appeals accepted.
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