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Petitioner: HABIB BANK Ltd. VS Respondent: MUHAMMAD HUSSAIN And Other
Court Name: Sindh High Court Judge(s): Tanzil-ur-Rehman Title: HABIB BANK Ltd. vs MUHAMMAD HUSSAIN And Other Case No.: Suit No. 460 of 1985 Date of Judgment:1987-06-11 Reported As: PLD 1987 Karachi 612 Result: N/A
JUDGMENT
JUDGMENT It is a suit for recovery of Rs.15,48,431 filed by the plaintiff which is a Banking Company. The plaintiff, at the request of the defendant, sanctioned to his proprietary concern M/s. Hussain Brothers, a loan of Rs.10 lacs in 1981. 2. The defendant on 29-3-1981 executed and then got registered a mortgage of his immovable properti6s being Plot Nos. 4-D/1 and 4-D/II Gizri Boulevard, Phase IV, Defence Housing Authority, Karachi and all structures and fittings and fixtures thereon, in favour of the plaintiff to secure the said loan and interest thereon at rate of 4$ above Bank rate subject to a minimum of 14$ per annum with monthly rests and all charges, costs, expenses, spent or incurred by the plaintiff. The defendant also on 9-5-1981 executed a Demand Promissory Note on behalf of his said proprietary concern for Rs.10 lacs with interest 4$ per annum above Bank rate with quarterly rests thereon. The defendant availed of the entire loan of Rs.10 lacs on or about 9-5-1981. The defendant made certain payments and the amount outstanding against him on 30-6-1985 was Rs.15,48,431 for which the above suit was filed in this Court on 3-7-1985. 3. The defendant, on service of summons, filed an application under Order XXXVII, Rule 3, C.P.C. Read with section 151, C.P.C. Praying for an unconditional leave to defend the suit. When the above application came up before me for hearing on 31-5-1987 counsel for defendant made a statement that he did not dispute the principal amount of Rs.10 lacs but the defendant was not entitled to the interest as it was unlslamic. The case was then adjourned for arguments on the point of 'interest' with notices to the standing counsel for Federal Government and Advocate-General, Sind. Mr. Khalid Anwar, Advocate who was present in Court that day in connection with some other case agreed to appear in the above suit as Amicus Curiae, on the request of this Court. The case was
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finally heard on 11-6-1987 and disposed of by my short order of the same day. By that short order, the defendant's application for leave to defend was granted; and the suit was finally heard and disposed of on the basis of the present record, on joint submission of the counsel for the parties, whereby the suit was decreed for the principal amount of Rs.10 lacs with costs and a preliminary decree was also ordered to be prepared in respect of the mortgaged property, for reasons to be recorded later, which are set down by me as follows: . 4. Mr. Ikram Ahmad Ansari, learned counsel for the defendant did not controvert, in substance, the various allegations made by the plaintiff in the plaint. Having admitted the principal amount of loan in the sum of Rs.10 lacs received by the defendant from the plaintiff, he submitted that the defendant paid a sum of Rs.1,65,000 to the plaintiff before institution of the suit. He further submitted that the defendant also paid a sum of Rs.4 lacs after the institution of the suit during February, 1986 - December 1986. Mr. A .I . Chundrigar, learned counsel for the plaintiff did not dispute this factual position. It was, however, urged by Mr. Ikram Ahmad Ansari that the above payment of Rs.5,65,000 made by the defendant related to the re-payment of the principal amount, whereas Mr. Chundrigar submitted that the payments made by the defendant were adjusted towards meeting out the liability, as a whole. Mr. Ansari placed his reliance on a letter, dated 8-12- 1986, already filed by him, through which he forwarded a Pay Order of Rs.1,00,000 to the plaintiff. But there is nothing to show in the said letter that the said payment or any other payment made by him on previous occasions was to be adjusted towards principal amount only. On the other hand, Mr. A.I. Chundrigar placed his reliance on sections 59 and 60 of the Contract Act, 1872, which read as under:- Section 59. "Where a debtor, owing several distinct debts to one person, makes a payment to him, either with express intimation, or under circumstances implying that the payment is to be applied to the discharge of some particular debt, the payment, if accepted, must be applied accordingly. Section 60. Where the debtor has omitted to intimate and there are no other circumstances indicating to which debt the payment is to be applied the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits." 5. Section 59 envisages two situations: (1) It accepts the principle that where a person owes several different debts to another, and makes payment to the creditor, he is entitled to pay his creditor for application of the payment to a particular debt and (2) in such circumstance, if the payment is to be applied to the discharge of a particular debt, it must be applied accordingly. Section 60 is intended to cover a different situation: when the debtor omits to intimate and there are no circumstances indicating as to which of the several debts, a payment is to be applied, the creditor may apply it at his discretion to any debt lawfully due and payable to him from the debtor. See Rameswa r v . Mahomed 36 Cal. 39, Bunsidhar v . Akhay Ram 1893 A W N 62, Manisty v. Jamesons 5 Pat. 326, 49 IC 273, Mills v. Fowkes 8 L J C P 276, Abdul v. Puran 25 I C 560, Bishum v. Siddique 35 IC 375. Thus, the law is now well-settled that if the debtor does not make any appropriation at the time when he makes the payment, the right of appropriation devolves on the creditor. In my view, section 59 of the Contract Act has no application to the facts of the present case. A transaction of the grant of loan with a promise or an agreement to repay the same with interest cannot be termed as several distinct debts owed by the defendant to the plaintiff. The debt consisting of principal and interest constitutes one debt. In any case, there is no notice from the defendant accompanying payment as to its appropriation to the principal amount of loan only.The contention of Mr. Ansari, therefore, fails.
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6. Learned counsel for the plaintiff has also relied on section 20 of the Limitation Act, 1908 but, in my view, the said section has no application to the facts of the present case as it has not been alleged that the debt in the suit or any part thereof, has become time-barred. 7. Mr. Chundrigar as to the question of interest and the Constitution 1973 submitted that the Objectives Resolution contains some directives meant for the Constituent Assembly or the Parliament, (Article 50), in order to give effect to the Principles and provisions laid down therein. Referring to Articles 29 to 40, relating to the principles of Policy, (Articles 29-40), he submitted that they are not fundamental rights (Articles 8-28). Fundamental rights are enforceable, whereas principles of policy are not. He further referred to Article 30(2) and submitted that it casts responsibility on the State for the observance of Principles of Policy and so they are not justiciable. Reliance was placed by him on Full Bench judgment of this Court reported as Muhammad Bachal Memon v. Government of Sind through Secretary Department of Food and 2 others PLD 1987 Kar. 296. He also referred to Article 38(f) of the Constitution relating to the elimination of Ribs and submitted that steps are to be taken in future. If interest is eliminated today this Article 38(f) will become redundant and no part of the Constitution can be held as redundant. Reliance was placed by him on Saeed Ahmad's case PLD 1974 SC 151. He, therefore, pleaded that consistent construction of Article 2-A to harmonise it with Article 38(f) is essential. It was further submitted by him that if two sections in a Statute are found repugnant to each other the last one should prevail. So, according to him, Article 38(f) which is later in sequence should prevail over Article 2-A. He relied on a case reported as Sahibzada Sharafuddin and 15 others v. Town Committee, Pindigheb and 2 others 1984 CLC 1517. He also submitted that the provisions of Article 2-A are directory and not mandatory. Reliance was placed by him on the case of Farid-un-Nisa Begum v. Chairman, Federal Land Commission, Rawalpindi and another PLD 1984 Kar. 449. It was further submitted by him that this Court has got jurisdiction to pass a decree with interest. Reliance was placed by him on the case of Bank of Bahawalpur Ltd. v. Syed Muhammad Shies PLD 1967 Kar. 433 and lastly, without conceding the effect of Article 2-A, he submitted that the loan was granted in 1981 whereas Article 2-A was inserted in the Constitution on 2nd March, 1985, therefore, interest is to be awarded till 1st March, 1985. 8. Mr. Mohammad Ali, learned Additional Advocate-General on Court notice to Advocate-General, Sind appeared in the suit and submitted that this Court exercises its jurisdiction as persona designate under the provisions of section 2(f) of the Banking Companies (Recovery of Loans) Ordinance, 1979, and therefore, has limited jurisdiction, within the framework of the said Ordinance. Moreover, it has no jurisdiction to strike down any law as repugnant to the Constitution or Islamic law. Reliance was placed by him on the case of Habib Bank Ltd. And 2 others v. Karachi Properties Investment Co. Ltd. And 4 others PLD 1984 Kar. 257. As regards Article 2-A, he submitted that the Objectives Resolution is not supra-Constitutional. It was further submitted by him that the High Court could, perhaps, 'digress' and decide this issue in its Constitutional jurisdiction and not under Original civil Jurisdiction. Superior Courts being themselves creation of the Constitution cannot declare a provision of the Constitution as void. Reliance was placed by him on Saeed Ahmad's case PLD 1974 SC 151 and Fouji Foundation's case PLD 1983 SC 457 and lastly, it was submitted that if two provisions of the Constitution are set against each other the rule of harmonious construction should be followed. 9. Mr. Ikram Ahmad Ansari, learned counsel for the defendant, in the first instance, submitted that interest was un-Islamic and as such not enforceable by a Court of law in the Islamic Republic of Pakistan. As to the prohibition and unlawfulness of the interest, he referred to verses 275-80 of Surah Al-Baqarah. Reliance was also placed by him on a case reported as Sardar Abdul Razaq Khan v. Azad J & K Government PLD 1986 AJ&K 158 and two judgments of mine reported as Qaiser Ali and 2 others v . Karachi Road Transport Corporation PLD 1986 Kar. 489 and Star Trading
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Company and another v. The Pakistan Insurance Corporation 1987 CLC 61. As to the jurisdiction of this Court, reliance was placed by him on my order, dated 16-4-1987 passed in Suit No. 519 of 1984 Bank of Oman v. East Trading Company PLD 1987 Kar. 404. 10. Mr. Khalid Anwar Advocate, as amicus curiae, referring to, in the first instance, Chapter IX and Chapter 3-A of the Constitution, submitted that the modalities of implementation of the recommendations of Council of Islamic Ideology have been provided in that Chapter itself, whereas Federal Shariat Court has a dual capacity. It is a Court, when it exercises appellate jurisdiction in criminal matters relating to Hudud, but it is not a Court, in a jurisprudential sense, when it exercises its suo motu power to consider a law from Islamic point of view. Reliance was placed by him on the case of Province of East Pakistan v. Mohammad Mehdi Ali Khan PLD 1959 SC 387. It was further submitted by him that the Federal Shariat Court does not have power to grant any relief, whether interim or final. It only declares certain provision of law within its limited sphere as repugnant to the injunctions of Islam. The Civil Court and particularly the High Court will have the jurisdiction in such matters to grant relief on the basis of the maxim 'where there is a right there is a remedy'. Learned counsel took pains to give historical background of the English common law in this respect, and besides referring to Broom's Legal Maxims (pp. 118 -25) and Halsbury's Laws of England, Fourth Edition, Vol. 10. Para. 713, referred to the cases of Sakhi Daler Khan v . Supdt. Incharge Recovery of Abducted Women PLD 1957 Lah. 813, Muhammad Shafi and others v . Muhammad Sabir and others PLD 1960 Lah. 591, Syed Iftikhar Ahmad Shah v. Zia-ul-Haq and others PLD 1967 Pesh. 151 and Makhan Singh v. State of Punjab AIR 1964 SC of India 381. On the question of the jurisdiction of this Court in a suit tried by it under the provisions of Banking Companies (Recovery of Loans) Ordinance, 1979, referring to section 2(f) and section 5 as substituted by Ordinance 2 of 1983 and section 6, as pre-existing, he submitted that this Court does not act as persona designate but as a High Court in exercise of its Original Civil Jurisdiction. Reliance was placed by him on a number of decisions reported as Mumtaz Khan v. Chief Settlement and Rehabilitation Commissioner and Mst. Khurshid Begum PLD 1966 SC 276, Hussain Bakhsh v. Settlement Commissioner, Rawalpindi and others, PLD 1970 SC 1, United Bank Ltd. v. Jaffar Flour and Oil Mills Ltd. And 2 others PLD 1985 Lah. 541, Muhammad Ayub Butt v. Allied Bank Ltd., Peshawar and others PLD 1981 SC 359, Azhar Hussain v. Chartered Bank, Faisalabad and 17 others 1981 CLC 516, Khadim Mohy-ud-Din and Mrs. S. Mahmud v. Chaudhry Rehmat Ali Nagra and Mst. Aziz Begum PLD 1965 SC 459 and Abdul Haq v. Saif-ur-Rehman and others PLD 1968 Lah. 478. As regards the exercise of jurisdiction by this Court to enforce 'the existing law' in accordance with Holy Qur'an and Sunnah, it was submitted by Mr. Khalid Anwar that he was quite clear in his mind that this Court has jurisdiction to construe and enforce the existing law in accordance with the Qur'an and Sunnah. Deferring to Article 2-A of the Constitution he submitted that this article may be interpreted in more than one ways, but the overall effect should be that all other Articles be interpreted in a manner that they are consistent with it. While interpreting Art. 2-A of the Constitution, he submitted that it is a single most important provision of the Constitution. The said Article has been deliberately kept in Part I of the Constitution and not Part II, which contains the Principles of policy which are not enforceable through Courts of Law. This Article 2-A read with its Annexe the Objectives Resolution, speaks of Sovereignty of Allah which is against the concept of a secular Constitution where sovereignty of the people is a recognized phenomenon. The Objectives Resolution provides that the Muslims of Pakistan shall be enabled to order their lives in accordance with the teaching of Islam, both individually and collectively. It is the State of Pakistan alone which may enable them collectively, and if it enacts a law which is repugnant to the teachings of Islam, this Court can declare it as void due to that repugnancy. Reliance was placed by him on Jibendra Kishore Achharyya Chowdhury and 58 others v. The Province of East Pakistan and another PLD 1957 SC 9.
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11. The question of the nature and extent of jurisdiction, I think, should be dealt with first. The Banking Companies (Recovery of Loans) Ordinance, 1979 in section 2(f) provides that 'Special Court' means a Special Court established under section 5. Section 5(1) originally provided that the Federal Government may, by notification in the official Gazette, establish as many Special Courts as it considers necessary, and where it establishes more than one Special Court, shall specify in the notification the territorial limits within which each one of them shall exercise jurisdiction under this Ordinance. Clause (2) further provided that a Special Court shall consist of a person who is a District Judge. The above section 5 was, later on, repealed by Ordinance 11 of 1983, and for definition of 'Special Court', section 2(f) was substituted by the same Ordinance, which reads as under:- 2(f). 'Special Court' means-- (i) in respect of a case in which the outstanding amount of loan does not exceed one million rupees ...., a person who is or has been a District Judge or an Additional District Judge and is appointed by the Federal Government, by notification in the official Gazette, to be a Special Court to exercise jurisdiction within such territorial limits as may be specified in the D notification, and, in the absence of such appointment, the District Court, and (ii) in respect of any other case, the High Court in the exercise of original civil jurisdiction." The first thing to be noticed in the above definition is that unlike the definition clauses in other statutes which generally say 'means and includes', the opening words of clause (f) of section 2 of this Ordinance say 'Special Court' 'means' only. It does not say 'includes' which means that the above definition is exhaustive and not inclusive. It excludes all other forums, in relation to the meaning of 'Special Court', as defined under this Ordinance. In other words, the Legislature intends that the legislative definition is to prevail over any other definition which might otherwise be attracted. The second thing which is to be noticed is that it has two sub-clauses. Sub-clause (i) is in respect of a case in which the outstanding amount of loan does not exceed one million rupees. This case is to be heard and decided by a person who is or has been District Judge or an Additional District Judge appointed by the Federal Government, by notification in the official Gazette, to exercise jurisdiction within such territorial limits as may be specified in the notification, and, in the absence of such appointment, the District Court (underlined by me). Sub-clause (ii) provides that in respect of any other case the High Court in the exercise of original civil jurisdiction,- which implies that the High Court will exercise jurisdiction in respect of a case in which the outstanding amount of the loan exceeds one million rupees. It is to be further noticed that sub-clause (ii) does not stop by merely saying 'High Court' as in the case of 'District Court' in the concluding words of clause (i), but it travels further and says 'in the exercise of original civil jurisdiction'. Thus, it seems apparent that the High Court while hearing a suit under the Ordinance exercises its powers which a High Court generally exercises while sitting on the original side. To obviate any doubt in this behalf clause 1(a) of section 6' may be referred, which reads as under:- 6(1) "A Special Court shall:- (a)in the exercise of its civil jurisdiction, have in respect of a claim filed by a banking company against a borrower or by a borrower against a banking company in respect of, or arising out of, a loan all the powers vested in a Civil Court under the Code of Civil Procedure, 1908 (Act V o 1908)." 12. It, thus seems clear, on the plane of principle, that the original conception of 'special Court' was that of a persona designate. This F was so held by the Peshawar High Court PLD 1981 Pesh. 138, and that decision was approved by the Supreme Court in the case of Ayub Butt v. Allied Bank PLD 1981 SC 359. This position, even after amendment, still holds good in case of a District Judge or Additional District Judge, to be notified by the Federal Government. 13. The amendment introduced in the definition clause (Sec. 2(f)) in 1983 has brought a radical change in the second part with which I am presently concerned. The point of distinction between the amended section and the pre-amendment section is that: In the original frame of things a
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specified or designated person namely the District Judge was being conferred those specified powers which are laid down in the Ordinance. However, in the post amendment scheme the change is not that instead of a District Judge, a High Court Judge is being conferred specified powers. What has happened is that 'the original civil jurisdiction of the High Court' has been invoked. There is thus no question of a persona designate arising in the facts of this case. 14. As to the distinction between persona designate and Court, the same has been well-illustrated in a judgment of a Division Bench, consisting of Waheeduddin Ahmad, C.J. And Muhammad Akram, J. Wherein it has been observed that:------- "On a plain reading of this new provision of the law, it is evident that the appellate power under the Ordinance is now invested by the statute in the 'District Judge having jurisdiction over the area' in his ordinary judicial capacity as the Presiding Officer of the principal Court in the District. He does not act as a persona designate in hearing the appeal under subsection (1) of section lb of the Ordinance (as amended). The intention of the Legislature in this respect appears to be manifestly clear." In the above case sector, 15(1) of the West Pakistan Urban Rent Restriction Ordinance, 1959, as it originally stood, gave power to the Provincial Government 'to appoint such District Judges as it thinks fit' as appellate authority. The question as decided by Honourable Supreme Court in Khadim Mohyuddin and another v. Ch. Rehmat Ali Nagra and another PLD 1965 SC 459 was whether the District Judge, as contemplated in the section acts as District Judge in his judicial capacity as the, Presiding Officer of the Principal Court in the District or as a persona designate. It was thus held in the said case that 'if the Legislature really wanted that the District Judge should hear the appeal as the Presiding Officer of the Principal Court in the District, it could have easily said so. The fact that the Provincial Government is given power to select for this purpose 'such District Judges as it thinks fit' indicates that the intention was not to confer appellate power on him as the Presiding Officer of the Principal Court in a District ...." Thus, as provided in section 2(f)(ii) in respect of cases (.Suits) exceeding the amount of one million, the position of the High Court in its original civil jurisdiction seems to be analogous to the position as it stood under the amended section 15(1) of the West Pakistan Urban Rent Restriction ordinance, 1959. 15. The question of the powers of the 'special Court' has come up for consideration in a number of cases. In the case of Farooq Ali v. Banque Indosues 1985 CLC 630 the contention was advanced that a 'special Court' did not have the jurisdiction of an ordinary civil Court. This contention was rejected. Reliance was placed on section 6(1)(a) of the Ordinance, which provides that a special Court shall, in the exercise of its civil jurisdiction, have all the powers vested in a civil Court under the Code of Civil Procedure. It was, therefore, held, that "section 9 of the C.P.C. Confers jurisdiction on civil Courts to try all suits of civil nature except those whose cognizance is either expressly or impliedly barred. Therefore, I fail to see why a special Court while dealing with the case which is cognizable by it H under the provisions of Ordinance XIX of 1979 cannot grant a relief which a civil Court could grant under section 9 of the C.P.C. 16. A similar question came up before a Division Bench of this Court in the case of Oriental Fashions v. National Bank of Pakistan PLD 1985 Kar. 178. In this case a writ petition was filed against the order passed by a Single Judge, while exercising powers under the Ordinance. The contention advanced was that the Single Judge was acting as a persona designate under the Ordinance and hence any order passed by him was subject to the Writ Jurisdiction of the High Court. This contention was rejected and it was observed that 'the point, therefore, for consideration in the present case is as to whether a learned Single Judge while exercising powers under the Ordinance acts as a persona designate or he acts as the High Court.A plain reading of the above quoted clause (f) of section 2 o the Ordinance indicates that the High Court is to exercise jurisdiction under the Ordinance in the exercise of its original civil jurisdiction and not as a Tribunal'. (Underlined by me).
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17. In so far as the meaning of the phrase 'original jurisdiction of the High Court' is concerned, it may be pointed out that the Supreme Court has decided in the cases reported as Mumtaz Khan v. Chief Settlement and Rehabilitation Commissioner and others PLD 1966 SC I 276 and Hussain Bux v . Settlement Commissioner PLD 1970 SC 11 about it. In the case reported as Mumtaz Khan v. Chief Settlement and Rehabilitation Commissioner and others, PLD 1966 SC 276 the question of the nature of an order .Passed by a single Judge in writ jurisdiction…
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