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Petitioner: Sh. ABDUL SATTAR LASI VS Respondent: FEDERATION OF PAKISTAN through Secretary, JUDGMENT
Court Name: Balochistan High Court Judge(s): Raja Fayyaz Ahmed, Akhter Zaman Malghani Title:Sh. ABDUL SATTAR LASI vs FEDERATION OF PAKISTAN through Secretary,
JUDGMENT
Reported As: 2006 CLD 18 Result: Petition dismissed Judgment JUDGMENT ' AKHTAR ZAMAN MALGHANI, J.---In this constitutional petition besides other, constitutionality of section 15 of the Finance Institutions (Recovery of Finances) Ordinance, 2001 has been challenged on the ground that it gives power of a Court of law to the Banks by creating a parallel and arbitrary judicial system in violation of Articles 4 and 175 of the Constitution as selling of the mortgaged property without intervention of the Court; the Bank exercise the judicial functions with regard to the determination of the quantum of the financial liability of the borrower towards the Bank, limitation, rate of mark-up etc. And per se determining the factum of default. The vires of section 15 have also been challenged on the grounds that section 15 has made the bank a "Judge" in its own cause which violates Article 4 of the Constitution and also on the ground that section 15 is discriminatory and arbitrary as it allows un-fettered and unreasonable powers to the Bank to decide whether they wish to proceed against a defaulter under section 9 or to resort to the coercive process as provided in of section 15(4) of the Ordinance. 2. Briefly stated, facts of the case are that the petitioner who is engaged in a number of businesses, availed financial facilities from the respondent No,2 from time to time. It appears that on or about 23-4-2003 respondent-Bank issued a notice to the petitioner demanding Rs,1046.114 millions along with costs of funds at 8% per annum by declaring him defaulter. The said notice was followed by another notice dated 30-5-2003 and the final notice 10-6-2003. The record further reveals that the respondent-Bank in exercise of power conferred on it by section 15 of the Ordinance, 2001 issued a notice for public auction of the properties mortgaged with the bank in lieu of financial facilities. The petitioner challenged the said public auction notice in the instant petition. On 23-7-2003 we
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suspended the operation of notices subject to furnishing solvent surety of Rs,500 millions to the satisfaction of Registrar of this Court. It appears from record that the said order was challenged before the Honourable Supreme Court in Civil Petition No,161-Q of 2003. The Honourable Supreme Court on 13-8-2003 directed that the process of selling of the property as per condition appeared in notice be completed but documentation shall remain postponed till the next date of hearing i,e, 25-8-2003 on which date the Honourable apex Court extended the order dated 13-8-2003 with consent of parties' counsel with the observation that till the next date of hearing final documentation shall not take place in respect of sale process as per bidding which has already taken place, however: in the meanwhile the bank shall be free to auction remaining property of the petitioner subject to same condition. It appears that in the meanwhile the petitioner was dismissed for non-prosecution on 25-3-2004 which was restored on 20-4-2004. During the interregnum from 25-3-2004 to 20-4-2004 the bank completed documents of the sale which had already taken place. The Honourable Supreme Court vide order dated 10-6-2001 :directed this Court to decide the writ petition as early as possible but not later than period of four months and in the meanwhile the auction purchaser shall not alienate the property any further in any manner and the documentation made during the pendency of the writ petition would be subject to the decision of the writ petition. After passing of the order by the Honourable apex Court this petition came up for hearing on 24-6-2004 but the matter cannot proceed as a request for adjournment was made on behalf of counsel for the petitioner as well as respondents Nos.2 and 3. On 13-7-2004 when case came up for hearing again a request for adjournment was made on behalf of counsel for respondent No,2 on the ground that he is indisposed whereupon the matter was adjourned to 26- 7-2004. It may be mentioned here that on 13-7-2004 Civil Miscellaneous Application No,2256 of 2003 praying for allowing to place on record documents annexed therewith and Civil Miscellaneous Application No, 1254 of 2004 for amendment the petition was filed, notices whereof were given to the respondents. On 26-7-2004 both the applications were allowed and notices to the newly impleaded respondents Nos.3 to 7 were directed to be issued. On 10-8-2004 notices were directed to be repeated for respondents Nos.3 to 7 as the learned counsel for the respondent-Bank showed his inability to satisfy that notices sent to Bank for service on respondents Nos.3 to 7 were served or otherwise. On 23-8-2004 the respondents Nos.3 to 7 were directed to be served by courier as well as under registered cover A.D. And also by publication in Daily Jang Karachi as the learned counsel for the petitioner though claimed that the notices were sent to respondents Nos.3 to 7 by courier service failed to place on record any receipt showing dispatch of notices to the respondents. On 9-9-2004 despite service, none of the respondents Nos.3 to 7 except respondent No,5 appeared. On that date general adjournment was granted to Mr. Muhammad Aslam Chishti learned counsel for the petitioner enabling him to appear before the Honourable Supreme Court whereas, Mr. Wasim Sajjad, Senior Advocate did not appear and Mr. Taalat Waheed, the other counsel for the petitioner expressed his inability to argue the matter. On 11-10-2004 when the case came up for hearing Mr. Wazir Rizvi, Advocate informed that for the added respondents Mr. Abdul Hafiz Pirzada, Advocate will be making appearance who could not appear on the date as he under medical advise was not to travel to Quetta. On 26-10-2004, the date to which the matter was adjourned, none of the learned counsel for the petitioner appeared. A request was also made by Mr. Abdul Hafiz Pirzada, Advocate for adjournment of the case in the last week of November, 2004 as he has to undergo medical check-up. On 25-11-2004 an application for adjournment of case was filed by Mr. H. Shakeel Ahmed, Advocate on behalf of Mr. Abdul Hafiz Pirzada, Senior Advocate, counsel for the interveners/added respondents seeking adjournment on the ground that he shall be unable to tender appearance before the Court as he is in the United Kingdom undergoing cardiac check-up/treatment. On 13-12-2004 Mr. Wasim Sajjad, Senior Advocate informed that Mr. Abdul Hafiz Pirzada, Senior Advocate could not come to Quetta as he was busy before the
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Honourable Supreme Court and asked him to request for adjournment on his behalf. On 13-1-2005 an application for adjournment was made on behalf of learned Attorney-General for Pakistan on the ground that he was busy before the Honourable Supreme Court of Pakistan. Besides, the main counsel for the petitioner, as well as; respondents/auction purchasers were also not present; therefore, the matter was adjourned. On account of summer vacation the matter was directed to be fixed in the first week of March. On 1st March, 2005 again the matter could not be heard on account of absence of learned Attorney-General for Pakistan and Mr. Abdul Hafiz Pirzada. ' On 15-3-2005 a Civil Miscellaneous Application No,348 of 2005 was filed on behalf of the petitioner for amendment of petition to take additional grounds as also to amend the relief clause of the memo. Of the petition, notice whereof was directed to be issued to the counsel for the respondents and learned Attorney-General for Pakistan. On 5-4-2005 the arguments of the counsel for the petitioner on Civil Miscellaneous Application No,348 of 2005 were heard but he could not conclude his submissions till 2-50 p.m., therefore, the matter was adjourned to 18-4-2005 on which date application was disposed of and matter was adjourned to a date in the second week of May, 2005. On 16-5-2005 again a request for adjournment was made on behalf of counsel for petitioner which was declined and Mr. Taalat Waheed commenced his arguments. After hearing the arguments of all the learned counsel the matter was, reserved for judgment on 16-6-2005. 3. We have heard the learned counsel for the petitioner as well as learned counsel for the respondents. The arguments of the learned counsel for the petitioners advanced by Mr. Wasim Sajjad, Mr. Muhammad Aslam Chishti and Taalat Waheed, Advocates can be summarized in the following words:-- (i) Section 15(4) so far as it permits sale of mortgaged property without intervention of the Court is ultra vires of the Constitution for the reasons it gives power of a Court of law to the banks by creating a parallel and arbitrary judicial system which is violative of Articles 4 and 175 of the Constitution. (ii) In selling the property without intervention of the Court bank is exercising judicial functions with regard to the determination of amount due, limitation, rate of interest, validity of documents and determining whether default has been committed or not. (iii) Section 15(4) has made the Bank a 'Judge' in its own cause, as such; it offends Article 4 of the Constitution and principles of natural justice have to be read as integral part of statute. (iv) Section 15(4) is unjust, arbitrary, un-reasonable, unfair and despotic. (v) Section 15(4) is also discriminatory as it allows unfettered and un-reasonable powers to the Bank to decide whether they wish to proceed against a borrower under section 9 or under the coercive provisions of section 15(4). (vi) It is duty of the Court to make a harmonious and reasonable construction of section 15 to make it just and in accord with the general and recognized principles of jurisprudence and every effort should be made to save the statute, therefore, section 9 and section 15 are to be read together and not in isolation. (vii) The word "default" used in various sections of the statute as commonly understood and defined should be given the same meaning throughout. Accordingly default will mean and to say the one established before a Court of law. Reference was made to section 3(3) of the Ordinance, 2001. Section 15(14) of the Ordinance, cannot be read independently and in isolation rather; must be considered along with the other related sections of the Ordinance. (viii) The provisions of section 15(14) will have to be given effect to as opposed to section 4 which reads that the Ordinance shall have effect notwithstanding any thing inconsistent therewith. The words "inconsistent" have not been used in section 15(14), therefore, if a construction can be placed which gives effect to all provisions of the Ordinance. Section 15(14) cannot be used to render other parts superfluous.
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(ix) The Ordinance, 2001 is not retrospective in operation and would not apply to the past transaction preceding to its commencement when predecessor Act held the field and there was no such provision in the previous law i,e, Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, XV of 1997 because the security furnished by the petitioner in the form of MDTD was in the year 1997. The said law was repealed and reenacted by the present Ordinance, in the year 2001 on 30-8-2001 and in view of section 5 of General Clauses Act it came into force on the night between 29th and 30th after mid-night, on which date the stated default had already occurred. Before 30th August, 2001 the only remedy available to the Bank was to file suit, therefore, the vested rights created in favour of the petitioner before the promulgation of Ordinance could not be taken away by giving retrospective effect to the Ordinance. (x) Principles of natural justice are to be read in the statute which stand violated in the instant case and; by giving powers to the Bank to itself decide the question of default without providing opportunity to the borrower to show that he has not committed the "default" would be violative of the law and the principle of natural justice. ' The learned counsel in support of their arguments placed reliance on the judgments reported in PLD 1998 SC 1445, PLD 1999 SC 1126, PLD 1996 Lah. 672, PLD 1957 SC 157, PLD 1988 SC 416, 1992 SCMR 563, PLD 2003 Kar. 127, 2002 CLD 962, 2004 CLD 1600, AIR 1942 All. 50, AIR 1973 Dehli 28, AIR 1976 Andh. Para. 93, AIR 1982, Gujarat 198 and AIR 1993 SC 935. 4. The arguments advanced in rebuttal by 1h learned counsel for respondents in brief were as under:-- (i) This Court has no territorial jurisdiction to grant the relief claimed in the constitutional petition as the subject-matter of the petition i,e, auction and purchase of properties, are situated in Sindh Province and the ultimate goal of the petitioner is to get the sales set aside and, in such events the affected party would be auction purchasers, who are residing ordinarily beyond the territorial jurisdiction of this Court. (ii) Under section 4, Banking Court has the exclusive jurisdiction in the matter and all disputes with regard to sale has to be decided by the Banking Court having jurisdiction in the matter as provided under section 15(11) of the Banking Court Ordinance, 2001. (iii) The petition is not maintainable as the petitioner has the adequate and efficacious remedy available by approaching to the Banking Court for redressal of his grievance. Under subsections (11) and (12) of section 15 the petitioner can bring his grievances for redressal before the Banking Judge before the sale and after the sale; and even at this stage within the purview of section but he ignored to resort to the available remedy, as such; cannot maintain the petition. (iv) The petitioner has already requested and demanded as regards the liability he owes to the bank to be dealt with under BPR-29 which prima facie shows that he did not dispute to be a defaulter at least to the extent of principal amount and this Court being Court of equity will not come to aid of a person who has not come with clean hands. (v) As the petition is liable to dismissal on other grounds; it would not be necessary to go into vires of the provisions. (vi) In view of section 15(11) and (12) the jurisdiction of the Banking Court has not been completely ousted, as such; the contention of the petitioner with regard to creation of parallel judicial system has no substance. (vii) The laws cannot be static and cannot be struck down on the arguments that the same are novel. (viii) There is always heavy duty cast upon the Col it to save the legislation instead of striking down it. (ix) The default committed by the petitioner is a continuing and subsisting one, renewed on every single day and this being the position of recurring and continuing cause of action; the question of
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retrospectivity does not arise. (x) Auction has been completed and the transaction has become past and closed transaction, as such; the same will not be affected even if the provisions are declared ultra vires. (xi) After receipt of notices the petitioner had remedy to approach to the Banking Court, if he has any claim with regard to the amount due, under section 9 of the Ordinance, 2001. (xii) Right of appeal against the judgment, decree and final order passed by the Banking Court is provided to the High Court and is to be decided by a Judge of the High Court, as such; sufficient protection has been provided in the Act to the borrower in respect of any of his right, liability or claim arising out of the transactions with the bank. ' They referred to the judgment reported in AIR 1988 SC 686. 5. Mr. Uzair Kiramat Bhandari appearing on behalf of Attorney-General raised the following contentions:-- (i) The question relating to the interpretation of any provision of the law on the subject can be competently challenged before the concerned Banking Court. According to the learned Advocate section 7(4) has to be read in conjunction with sections 15(11) and 15(12). (ii) The cause of action accrued against the petitioner initially on his failure to discharge the liability was not final, absolute and static rather; the same is recurring one. (iii) The change brought in enactment laying down the coercive and penal consequences of default has been made in the public interest and while interpreting the provisions of section 15 the Court has to keep in mind the back-drop which necessitated such change. (iv) There is no need for prior decree for exercising powers under section 15 as under section 15(4) the process is to be completed without intervention of the Court. (v) The words "for the purpose of this section" used in subsection (3) of section 3 signifies that the word `default' used in that section has its limited specified applicability within the purview of section 3. (vi) Section 15 envisages the determination of liability, giving time bound direction to settle the liability and the borrower has a right to respond and if any objection is taken that has to be dealt with objectivity. (vii) Borrower can have recourse to subsections (11) and (12) of section 15. The words "all disputes relating to the sale" are used in broad spectrum and it cannot be restricted to only post-sale stages, abundantly clear from subsection (12). (viii) Similar and identical provisions can be seen existing on the statute books, such as; section 69 of the Transfer of Property Act, section 25 of Agriculture Development Bank Ordinance, 1961, section 176 of the Contract Act, section 40 of IDBP Ordinance, 1961 and sections 46 and 54 of Sale of Goods Act. (ix) Similar provisions are also available in State Financial Corporation Act, 1951 i,e, section 29, vires of which were challenged in the Gujarat High Court but same were declared to be intra vires. ' The learned counsel placed reliance on the judgments reported in PLD 2000 Lah. 508 and AIR 1990 Gujarat 105. 6. In rebuttal Mr. Muhammad Aslam Chishti, Senior Advocate submitted that the transaction in the instant case was not a past and closed transaction as contended by the learned counsel for the respondents because same is subject to decision of this Court. In Gujarat's case guidelines were provided for taking action under section 29 by constituting high power commission, whereas the instant case is of exclusive delegation of powers. 7. We have carefully considered the contentions put forth by the parties' learned counsel and have also gone through the relevant provisions of law as well as case-law referred to by the learned counsel for the parties.
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8. So for as the territorial jurisdiction of this Court in the matter is concerned, it may be observed that under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 writ could be issued against any person who is performing in the Province any function irrespective of its nature relating to the affairs of the Federation, Province or a local authority within the - territorial jurisdiction of a High Court. In the instant petition the petitioner has challenged the vires of section 15 of the Ordinance, 2001 i,e, the law equally applicable to the Province of Balochistan, which in our view is the main relief claimed in the petition whereas; the other reliefs for declaring public auction notices as illegal, void or setting aside auction proceedings carried out in the exercise of powers conferred under section 15(4) are ancillary to the main relief, as such; this Court has the jurisdiction in the matter which cannot be ousted only on the ground that the properties auctioned and purchased happen to be situated outside the jurisdiction of this Court or that the respondents were residing outside the jurisdiction of this Court because the jurisdiction conferred on this Court under Article 199 of the Constitution is no contigent upon residence of an aggrieved person but it requires that a person/authority/functionary of State against whom order was sought to be issued should be operating or be amenable to jurisdiction of High Court, therefore, the provision of section 20, C.P.C. Could not be pressed into service or to be read in Article 199; as vires of the Federal Law has been challenged which is applicable to whole of the Pakistan. In this regard we are fortified by the judgment reported in 1996 CLC p.539. The relevant observations are reproduced hereinbelow:--- "The ratio deducible, from the foregoing discussion is, that the jurisdiction of this Court under Article 199 of the Constitution of Pakistan (1973) is not contingent upon the residence of aggrieved person. Equally it is not relatable to places where the writ issued by it will have effect. What is required by this Article, is, that the person/authority/functionary of the State against whom the writ is sought to be issued shall be operating or be amenable to the jurisdiction of this Court. In other words it means that the writ issued by the Court cannot run beyond the territory subject to its jurisdiction and secondly that the person or authority to whom the Court was to issue writ was amenable to its jurisdiction either by residence or by location within its territory. The elements embodied in section 20 of C.P.C. Cannot be introduced in Article 199 of the Constitution. Applying this principle to facts and circumstances of the cases in hand, it is quite clear to us that the impugned order was passed by Chairman Federal Land Commission at Rawalpindi; that the Federal Land Commission was/is a Federal Institution and operates within the territories of whole of Pakistan; that it functioned at relevant time at Rawalpindi and it was so clearly amenable to jurisdiction of the High Court of Lahore. We, on this view, have no reason to depart from the view taken by the Division Bench of this Court vide order dated 29-3-1976. In result, the preliminary objection raised by the learned Deputy Attorney-General is found to be misconceived and is accordingly repelled." 9. In the judgment reported in 1995 CLC (Quatta) 1027 this Court held that the provisions as contempla zed under Article 199 of the Constitution are read together, as such; the words "without lawful authority" used in clause (1) (a)(ii) of Article 199 of the Constitution are suggestive of the fact that Article 199 is applicable to all persons, Authorities, Tribunals, Corporations and Autonomous and semi-Autonomous bodies subject to Constitution and, thus; constitutional jurisdiction cannot be limited within the boundaries of a Province. 10. In the judgment reported in PLD 1988 SC 387 the Honourable apex Court held that the Election Commission is a person or authority which exercises jurisdiction in the Province of East Pakistan in connection with the affairs of the Centre namely elections to the office of the President, National Assembly and the Provincial Assemblies and for holding a Referendum as provided for in the Constitution, as such; Commission is subject to the jurisdiction of the High Court notwithstanding that its main office and Secretariat are located in the Province of West Pakistan because the plain meaning of the words "a person performing in the Province functions in connection with the affairs of the Centre" exclude territorial limitations, such as that the person or authority to whom the High
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Court is empowered to issue writ must be amenable to its jurisdiction either by residence or location within those territories. 11. Whereas; in the judgment reported in PLD 1987 SC page 334 the Honourable apex Court held that while determining the constitutional jurisdiction, the High Court has to see the dominant object of filing of the constitutional petition. 12. In view of the dictum laid down in the above u o tines and considering that the dominant object for filing of the instant petition is to challenge the validity and vires of section 15 of the Ordinance, 2001, we are inclined to hold that this Court has the jurisdiction in the matter. 13. Likewise the contention of the learned counsel for the respondents that the petitioner is not entitled to any of the reliefs from this Court exercising equitable jurisdiction, for being a defaulter and that the purpose of filing this petition is an attempt to evade the liability and retain ill-gotten gains; it is suffice to observe that through this petition the constitutionality of section 15 of the Ordinance, 2001 has been challenged on the ground for being discriminatory, arbitrary and offending against the provisions of Articles 2-A, 4 and 175 of the Constitution, therefore, it would be appropriate to first attend to such questions without going into merits of the case. 14. Coming to the contention of the learned counsel for the petitioner with regard to the retrospective operation of the Ordinance, 2001 it may be seen that the petitioner obtained finance facilities in the year 1997 and mortgaged different properties in…
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