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Official Citation: 2024 CLD 1481
Court / Jurisdiction: Islamabad High Court
Year of Decision: 2023
Decision Date: 2023-12-31
Parties: Syed Waqar-ul-Hassan Shah Burkhari and others vs Small Business JUDGMENT
Ruling Summary: This decision was rendered by the Islamabad High Court on 2023-12-31, officially reported as 2024 CLD 1481. In this matter between Syed Waqar-ul-Hassan Shah Burkhari and others and Small Business JUDGMENT, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.
Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.
Case cited as 2024 CLD 1481
Court Name: Islamabad High Court Judge(s): Miangul Hassan Aurangzeb, Saman Rafat Imtiaz Title:Syed Waqar-ul-Hassan Shah Burkhari and others vs Small Business
JUDGMENT
Reported As: 2024 IHC 182, 2024 CLD 1481 Result: Appeal Dismissed Judgment
JUDGMENT MIANGUL HASSAN AURANGZEB, J:- Through this judgment, we propose to decide the following cases:- (i) Regular First Appeal No.204/2004 titled "Mian Muhammad Ajmal Vs. Syed Nazar Hussain etc." (iii) Civil Revision No.06 of 2005 titled "Mian Muhammad Ajmal Vs. Syed Nazar Hussain etc." (iii) Execution First Appeal No.02/2013 titled "Syed Waqar-ul-Hassan Shah Bukhari etc. Vs. Small Business Corporation etc." 2. This case has a chequered history spreading over more than twenty-five years. The essential facts culled out from the voluminous record are that on 01.12.1996, a finance facility of Rs.20,00,000/- had been availed by M/s Blossom Towels Industries (Pvt.) Ltd. ("Blossom") from Small Business Finance Corporation ("SBFC") for a period of three years ending on 30.11.1999. 3. By virtue of the provisions of the Regional Development Finance Corporation and Small Business Finance Corporation (Amalgamation and Conversion) Ordinance, 2001, SBFC and Regional Development Finance Corporation were amalgamated into SME Bank Limited, which was incorporated into a public limited company. In this judgment "SBFC" shall be referred to as "SME Bank." 4. Mian Muhammad Ajmal ("Ajmal") was the Chief Executive Officer of Blossom. He and his wife, Yasmin Begum, had executed documents creating a mortgage over Unit No.1, Plot No.1-Z, F-10 Markaz, Islamabad ("mortgaged property") in favour of SME Bank. Default in the repayment obligations caused SME Bank to institute a suit for recovery of Rs.30,31,040/- against Blossom, Ajmal
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and his wife on 13.05.2000 before the learned Banking Court, Rawalpindi. Vide judgment and decree dated 12.07.2001, the learned Banking Court dismissed the application for leave to defend filed by Blossom etc. and consequently the said suit was decreed to the extent of Rs.28,05,179/- with actual costs and mark-up at the rate of 15% from the date of the institution of the suit till realization of the decretal amount. Blossom etc. preferred R.F.A.No.161/2001 against the said decree before this Court. On 13.08.2001, SME Bank had filed a petition for the execution of the said order and decree. In these proceedings, an order for the auction of the mortgaged property had been passed. The application filed before this Court in R.F.A.No.161/2001 by Blossom etc. for staying the auction proceedings was dismissed vide order dated 18.02.2002 and the said order was upheld by the Hon'ble Supreme Court vide order dated 09.05.2002 passed in Civil Petition No.618/2002. Vide order dated 16.04.2008, R.F.A.No.161/2001 was disposed of after the learned counsel for the appellants in the said appeal sought the withdrawal thereof. He had also made the statement to the effect that the decree had been satisfied. 5. On 23.08.1999, an agreement to sell had been executed between Ajmal and Syed Nazar Hussain Shah ("Nazar") whereby the former agreed to sell to the latter Unit No.1 consisting of two shops with their basement, two other shops on the ground floor, one office on the first floor and one flat on the second floor in the building known as "Seasun Complex' located on Plot No.1-Z Markaz F-10, Islamabad ("suit property"). The sale consideration was agreed to be Rs.47,00,000/- out of which Rs.10,00,000/- was paid as earnest money and additionally Rs.5,00,000/- was paid in cash and Rs.5,00,000/- through traveller cheques issued by Habib Bank Limited ("HBL"). In this way, Rs.20,00,000/- was admittedly paid to Ajmal when the agreement was executed whereas, the remaining sale consideration was agreed to be paid by 24.10.1999. Clause (b) of the agreement obligated Ajmal to clear all debts owed to Allied Bank Limited ("ABL") within a period of fifteen days of the execution of the agreement. It may be mentioned that the only difference between the suit property and the mortgaged property is that the suit property does not include the roof top of Unit No.1, Plot No.1-Z, F-10 Markaz, Islamabad. 6. On 18.10.1999, a supplementary agreement was executed between Ajmal and Nazar. In this agreement, Ajmal acknowledged that he had obtained a loan from ABL and in lieu thereof the suit property had been pledged. The supplementary agreement also refers to Ajmal's assurance in the agreement to sell dated 23.08.1999 that all debts would be paid and the suit property would be redeemed. Since Ajmal was unable to repay the loan to ABL, Nazar agreed to pay Rs.6,00,000/- which Ajmal had to pay to ABL. 7. On 22.11.1999, a second supplementary agreement was executed between Ajmal and Nazar under the terms whereof the deadline for the finalization of the transaction was extended to 24.11.1999. The recitals to this agreement show that Nazar had paid Rs.6,00,000/- more to Ajmal on the date of the execution of the said agreement. This agreement also shows that Ajmal had delivered possession of the first and the second floors (office No.1 and residential flat) to Nazar. 8. On 24.01.2000, a third supplementary agreement was executed between Ajmal and Nazar under the terms whereof the deadline for the finalization of the transaction was extended to 06.03.2000. 9. On 27.01.2000, Ajmal executed an irrevocable general power of attorney authorizing Nazar's son Syed Abrar-ul-Hassan Bukhari to transfer the suit property either to Nazar or anyone else. In this power of attorney, Ajmal acknowledged that on 23.08.1999 Rs.10,00,000/- had been paid as earnest money; Rs.6,00,000/- was paid on 18.10.1999; and Rs.1,20,000/- on 27.10.1999. On the date of the execution of the said power of attorney, Rs.26,80,000/- (Rs.25,80,000/- through bank draft No.DJA- 359219-602-3 dated 27.01.2000 drawn on HBL and Rs.1,00,000/- in cash) was paid by Nazar to Ajmal and this fact is also duly acknowledged in the said power of attorney. In this way, a total amount of Rs.44,00,000/- was paid by Nazar to Ajmal and Rs.3,00,000/- remained to be paid. In this power of attorney, Ajmal had also acknowledged the fact that possession of the suit property had been
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handed over to Nazar and that in the event of Ajmal's demise, his legal heirs would be bound to transfer the suit property to Nazar and in case of Nazar's demise to his legal heirs. 10. What was not mentioned in the agreement to sell dated 23.08.1999 and/or any of the supplementary agreements was the fact that Ajmal had also obtained a loan from SME Bank. On 03.12.2001, Nazar had filed a suit for specific performance of the agreements dated 18.10.1999, 22.11.1999 and 24.01.2000 before the Court of the learned Civil Judge, Islamabad. The outcome of these proceedings and the proceedings ancillary thereto shall be discussed at a subsequent stage in this judgment. 11. As mentioned above, for the execution of the decree dated 12.07.2001, SME Bank had on 13.08.2001 filed an execution petition before the learned Banking Court. In the execution proceedings, an order for the auction of the mortgaged property was passed and an auctioneer was appointed. According to Nazar, this was the stage at which he came to know about the loan obtained by Ajmal from SME Bank and the said decree dated 12.07.2001. 12. On coming to know about the said judgment and decree dated 12.07.2001, Nazar filed an application under Section 12(2) of the Code of Civil Procedure, 1908 ("CPC") for the recall of the same. The position taken by Nazar in the said application was that he was a bonafide purchaser of the suit property not having any notice as to mortgage over the said property created in favour of SME Bank. 13. The said application was dismissed by the learned Banking Court vide order dated 09.09.2002. It was held that Ajmal and his wife had executed documents creating a mortgage over the mortgaged property in favour of SME Bank so that the finance facility could be availed by Blossom. Furthermore, it was held that the mortgage in favour of SME Bank had been created in the year 1996 which was prior in time to the execution of the agreement to sell between Ajmal and Nazar; and that Nazar had no locus standi to seek the setting aside of the judgment and decree dated 12.07.2001 or to have the auction proceedings stayed. 14. Writ petition No.2797/2002 filed by Nazar against the said order dated 09.09.2002 was dismissed in limine by the Hon'ble Lahore High Court, Rawalpindi Bench vide order dated 23.09.2002. This order was assailed by Nazar before the Hon'ble Supreme Court in civil petition No.1624/2002. 15. Now, pursuant to the order for the auction of the mortgaged property passed by the learned Banking Court, auction was conducted on 28.09.2002 in which SME Bank offered to purchase the mortgaged property for an amount equivalent to the decretal amount. As per the Court auctioneer's report dated 30.09.2002, the mortgaged property was sold in auction to SME Bank for an amount of Rs.28,05,179/. On the date of the auction, an application was filed by Nazar to adjourn the matter so as to await the outcome of civil petition No.1624/2002 pending before the Hon'ble Supreme Court. Nazar had also filed an application before the learned executing Court expressing his readiness to deposit Rs.20,00,000/- in the Court. However, the auction went ahead but the sale in favour of SME Bank was not confirmed at any stage. 16. In the proceedings before the Hon'ble Supreme Court, the position taken by Nazar was that he was ready to pay the entire amount that was outstanding against Ajmal to SME Bank, and that in this regard, he had filed an application before the learned Banking Court. Nazar requested the Hon'ble Supreme Court to direct the learned Banking Court to decide the said application expeditiously. Vide order dated 02.10.2002, the Hon'ble Supreme Court allowed Nazar's request to withdraw civil petition No.1624/2002 and directed the learned Banking Court to decide Nazar's said application as early as possible. 17. In fact it was on 25.10.2002 that Nazar filed an application before the learned Banking Court expressing his readiness to deposit Rs.28,05,179/- with the caveat that the said amount should be considered as having been deposited as trust and liable to be refunded in the event of the setting aside of the judgment and decree dated 12.07.2001.
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18. After the said order dated 02.10.2002 was passed by the Hon'ble Supreme Court, the learned Banking Court vide order dated 25.10.2002 directed Nazar to deposit the decretal amount, i.e. Rs.28,05,179/- by 05.12.2002. It was also ordered that if the said amount is not deposited by the said deadline, Nazar's objections to the auction would be deemed to have been dismissed. 19. On 02.12.2002, Nazar is said to have deposited a pay order for Rs.28,05,180/- drawn on HBL in the learned executing Court. The said amount of Rs.28,05,180/- was not immediately available to SME Bank for withdrawal since Ajmal, while depositing the pay order for the said amount, had submitted an application with the prayer that the said amount be kept in the Court as trust till the adjudication of Nazar's objection petition on merits. 20. Since Ajmal did not pay the decretal amount, the learned Banking Court on 30.10.2002 had issued warrants for his arrest and in execution of such warrants, Ajmal had been arrested on 10.11.2002 and sent to judicial lockup on 11.11.2002. Ajmal continued to remain in prison until 07.10.2003 when he was produced before the learned Banking Court for the recording of his statement. 21. On 07.10.2003, Ajmal was in police custody when he was produced before the learned Banking Court. After his handcuffs were removed, he recorded his statement on oath that a settlement had been arrived at between the parties. Furthermore, it was stated that the amount which the State Bank of Pakistan ("SBP") would determine as payable under the decree dated 12.07.2001, would be paid by Nazar, and the said decree would be considered as having been passed against Nazar. It was also stated that the entire sale consideration for the suit property had been received by Ajmal; that Ajmal would make a statement before the Court in which the suit for specific performance instituted by Nazar is pending to the effect that he would have no objection if the suit is decreed; that the amount of Rs.28,05,179/- which Nazar had deposited in the Court would be paid to the decree holder / SME Bank; that if the SBP determines the amount payable under the said decree dated 12.07.2001 to be less than Rs.28,05,179/-, the differential would be returned to Nazar; that the mortgaged property would be redeemed in favour of Nazar upon the suit for specific performance being decreed and upon the payment of the entire decretal amount in accordance with the determination to be made by the SBP; and that Nazar would not pursue the criminal case registered by him against Ajmal before the FIA. The said statement was recorded in the presence of the counsel for Nazar and the decree holder / SME Bank. 22. On 08.10.2003, Ajmal appeared before the learned Civil Court where the suit for specific performance instituted by Nazar was pending and recorded his statement on oath to the effect that he had no objection if the said suit was decreed in terms of the settlement recorded before the learned Banking Court. Learned counsel for SME Bank, which was defendant No.4 in the said suit, also recorded a statement to the effect that a settlement had been arrived at between the parties before the learned Banking Court; that payment was being made in terms of the said settlement; that once the entire payment is made, the mortgage would be redeemed; and that SME Bank should be deleted from the array of the defendants. 23. On the basis of the statements recorded by Ajmal and the learned counsel for SME Bank, the learned civil Court, on 21.10.2003, decreed the suit for specific performance instituted by Nazar in the following terms:- "[CDA] is directed to substitute the name of plaintiff, Nazar Hussain Shah S/o Syed Nijabat Ali Shah Bukhari as co-allottee / co-sharer in place of Mian Muhammad Ajmal, in its record with regard to Plot No.1-Z, F-10 Markaz, Islamabad, subject to the payment of all dues according to the rules & regulations of the CDA. No order as to costs. The file be consigned to the record room for completion. [Nazar Hussain Shah] would step into the shoes of [Mian Muhammad Ajmal] so far the liability on suit property [is] concerned."
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24. Ajmal did not file an appeal against the said judgment and decree dated 21.10.2003. However, on 17.12.2003 Ajmal filed an application under Section 12(2) C.P.C against the said decree. This application was dismissed by the learned Civil Court vide order dated 27.10.2004, which was further assailed by Ajmal in appeal (R.F.A.No.03/2004) before the Hon'ble Lahore High Court. On 22.12.2004, Ajmal withdrew the said appeal and thereafter filed a revision petition (C.R.No.06/2005) against the said order dated 27.10.2004. 25. On 26.01.2006, Nazar had filed a petition for the execution of the said judgment and decree dated 21.10.2003. On 15.12.2006, Ajmal filed an application under Section 47 CPC objecting to the execution. In the said application, it was pleaded inter alia that the decree could not be executed since the roof rights were not supposed to have been handed over to Nazar under the terms of the agreements between Ajmal and Nazar or the settlement agreement; that Nazar had not abided by his commitment to withdraw the criminal case pending before the Special Judge Central, Rawalpindi that he got registered against Ajmal; that Ajmal had filed R.F.A.No.204/2004; that the execution proceedings could not proceed without the impleadment of SME Bank; and that Nazar's two sons who had been serving in the District Judiciary of Punjab had been dismissed by the Hon'ble Lahore High Court due to their involvement in the case between Nazar and Ajmal. The said application was contested by Nazar by filing a written reply. 26. Vide order dated 07.07.2009, Ajmal s said application under Section 47 CPC was dismissed by the learned executing Court. This order was further assailed in an appeal by Ajmal before the Court of the learned Additional District Judge, Islamabad. Vide order dated 06.10.2010, the said appeal was also dismissed. C.R.No.1192/2010 was preferred against the said order dated 25.11.2010 before the Hon'ble Lahore High Court. After the establishment of this Court, the said civil revision petition was transferred to this Court, which allowed the said civil revision petition vide order dated 22.03.2012 by setting-aside the judgments of the learned Courts below and remanding the matter to the learned executing Court for a decision afresh. The said order dated 22.03.2012 was assailed by the legal heirs of Nazar before the Hon'ble Supreme Court in C.P.No.505/2012. Vide order dated 18.12.2014, the said petition was allowed by the Hon'ble Supreme Court, which took the view that the material on the record was sufficient for the High Court to decide the revision petition instead of remanding the matter to the learned executing Court. The Hon'ble Supreme Court set-aside the said order dated 22.03.2012 and sent the matter back to this Court for a decision afresh on the revision petition. 27. The post-remand proceedings culminated in the order dated 17.06.2015 whereby this Court dismissed C.R.No.1192/2010. The said order dated 17.06.2015 was further challenged by Ajmal before the Hon'ble Supreme Court in C.P.No.1750/2015, which was dismissed vide order dated 05.10.2015. It is pertinent to reproduce herein below the said order dated 05.10.2015:- "This case was argued at length for about forty-five minutes. When the learned ASC for the petitioner realized that he cannot get anything out of the orders passed by the Court executing the decree and other fora functioning in the hierarchy, he straightaway stated that he would not press it and pursue his remedy under Section 152 CPC before the Court which passed the decree. 2. In this view of the matter, the petition is dismissed as not pressed." 28. On the basis of a settlement arrived at between the parties and recorded by the learned Banking Court on 07.10.2003, SME Bank, on 15.10.2003 withdrew Rs.28,05,180/- from the Banking Court. SME Bank takes the position that on the payment of such amount, the judgment and decree dated 12.07.2001 is not satisfied. SME Bank explains this in its written arguments by asserting that out of Rs.28,05,180/- deposited in the Court, an amount of Rs.14,76,231/- was adjusted towards mark-up and Rs.13,28,948/- towards the principal amount leaving Rs.14,76,231/- to be paid by the judgment debtors. It also asserts that the present outstanding balance including mark-up at the rate of 15% on Rs.14,76,231/- stands at Rs.42,81,410/-.
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29. Apparently, an application had been submitted to the SBP by Nazar for a review of the amount that was payable under the decree dated 12.07.2001. Vide letter dated 20.08.2004, the SBP informed Ajmal that the SBP Committee for Resolution of Cases had decided that the said application could not be entertained. Once this information was placed before the learned Banking Court, order dated 04.09.2004 was passed directing Nazar to deposit Rs.7,20,161/- as the outstanding amount under the decree dated 12.07.2001 by 05.10.2004. Admittedly, Nazar did not comply with this order and took the position before the learned Banking Court that he had filed an application for review of the decision taken by the SBP. 30. Nazar had indeed filed another application before the SBP for reconsideration of the matter. SME Bank, through its letter dated 17.05.2005, after making reference to SBP s letter dated 31.03.2005 addressed to Nazar, offered a settlement plan with the following relief:- "75% of charged mark up or 50% of total outstanding in your loan account (whichever is less from among the above two) The remaining settlement amount paid within one year of the formal approval of the settlement plan." 31. SME Bank's said letter dated 17.05.2005 caused Nazar to file an application before the learned Banking Court praying for an order to SME Bank to refund (i) Rs.2,32,179/- under "75% of charged mark-up" or (ii) Rs.6,58,848/- under "50% of the total outstanding in loan account." This calculation was done by Nazar by treating the decretal amount of Rs.2,805,179/- to be the same in the year 2005. The said application was contested by SME Bank by filing a written reply in which it was pleaded inter alia that the time-bound relief offered to the judgment debtor had expired. 32. Vide order dated 17.09.2005, the learned Banking Court dismissed Nazar's said application. In the said order, it was mentioned that one of the terms of the Ramzan Loan Relief Package under which the offer was made to the judgment debtor was that no refund could be claimed by the judgment debtor. Furthermore, it was held that the benefit of the relief would be applicable to the amount not as of the date of the decree (i.e. 12.07.2001) but the date of the announcement of the said Package on which date the amount payable by the judgment debtor had swelled to Rs.15,06,983/-, and that the benefit of the relief would be on this amount. 33. Against the said order dated 17.09.2005, Nazar preferred an appeal (FAO No.160/2005) before the Hon'ble Lahore High Court. Vide order dated 18.06.2008, the said appeal was dismissed for non- prosecution. The application for the restoration of the said appeal was also dismissed for non- prosecution on 02.07.2009. The time-barred application for the restoration of the restoration application was dismissed by this Court vide order dated 05.04.2012. Nazar's legal heirs assailed the said order dated 05.04.2012 before the Hon'ble Supreme Court in C.P.No.856/2012, which was dismissed as withdrawn on 11.01.2013. 34. It may be mentioned that Nazar passed away on 22.07.2009 whereafter his legal heirs were impleaded as parties in the cases before different fora. 35. In its order dated 10.12.2012, the learned Banking Court recorded the submission of the learned counsel for SME Bank that the decretal amount of Rs.28,05,179/- had been paid whereas an amount of Rs.33,26,728/- was outstanding in respect of costs of funds calculated from the date of the institution of SME Bank's suit till 31.01.2012. The learned Banking Court also recorded the contention of the learned counsel of Ajmal that he was ready to pay the outstanding liability to SME Bank provided possession of the mortgaged property is taken back from Nazar and given to Ajmal through an order of the Court. Learned counsel for Nazar however took the position that in view of the statements of the parties recorded by the learned Banking Court on 07.10.2003 he was ready to pay Rs.7,00,000/- to SME Bank in compliance with the order dated 04.09.2004 passed by the learned Banking Court. Since the offer made on behalf of Nazar was not accepted by SME Bank, the learned Banking Court directed Nazar to pay Rs.33,26,728/- as costs of funds payable up to
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31.01.2012. It is in these terms that the learned Banking Court disposed of the objection petition filed by Nazar. The said order dated 10.12.2012 has been assailed by Nazar's legal heirs in E.F.A.No.02/2013. 36. In support of the grounds taken in E.F.A.No.02/2013, learned counsel for Nazar's legal heirs submitted that with the purchase of the mortgaged property by SME Bank in the auction, the decretal amount of Rs.28,05,179/- stood adjusted on 28.09.2022; that on gaining knowledge of the decree dated 12.07.2001 in favour of SME Bank, Nazar rushed to the Hon'ble Supreme Court and thereafter deposited the decretal amount in the Banking Court on 02.12.2002 for onward payment to SME Bank; that it was SME Bank that negligently delayed the withdrawal of the decretal amount until 12.01.2005; that after receipt of the decretal amount, the learned Banking Court could not have proceeded further in the execution proceedings; that the amount claimed by SME Bank in addition to the decretal amount was unfair; that at best SME Bank could have claimed mark-up on the decretal amount from the date of the institution of the suit (i.e. 13.05.2000) till the date of the payment of the decretal amount in the Court (i.e. 02.12.2002); that Nazar had accepted the responsibility to pay the decretal amount through the statement recorded before the learned Banking Court on 07.10.2003; that thereafter on 04.09.2004, the learned Banking Court directed Nazar to deposit Rs.700,000/- in the Court; that the review petition filed by Nazar against the said order dated 04.09.2004 was dismissed by the learned Banking Court vide order dated 17.09.2005; that the learned Banking Court vide order dated 17.09.2005 held that on the basis…
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