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Petitioner: IRFAN NAWAB through Attorney. VS Respondent: SONERI BANK LIMITED
Court Name: Sindh High Court Judge(s): Mushir Alam, Muhammad Shafi Siddiqui Title: IRFAN NAWAB through Attorney. vs SONERI BANK LIMITED Case No.: Special High. Court Appeal No,98 of 2012 Date of Judgment:2013-05-07 Reported As: PLJ 2013 Karachi 218, 2013 CLD 1922 Result: Appeal allowed
Judgment ORDER ' MUHAMMAD SHAFI .SIDDIQUI, J.--- This appeal arising out of an order passed on C.M.A. No,10220 of 2011 on 22-5-2012 in terms whereof the injunction application in respect of one of the two mortgaged properties was dismissed. 2. Brief facts leading to filing of this case are that the appellant being a sole proprietor of Nawab and Sons having banking relationship with the respondent availed certain financial facilities and pursuant to such financial facility mortgaged two properties with the respondent. The properties are Faran Cooperative Housing Society Property and Jinnah Cooperative Housing Society Property hereinafter referred to as "Faran Property" and "Jinnah Property" respectively. The mortgage in respect of Faran property was created by way of Mortgage Deed and deposit of title deed whereas the mortgage in respect of Jinnah property was created only by way of deposit of title deed. 3. The appellant substantially submitted that in fact they have.Paid the entire amount that was due and payable to the respondent and hence he filed a suit for settlement of account and for redemption of the mortgaged properties referred above. The suit was instituted under Financial Institutions (Recovery of Finances) Ordinance, 2001 in response to a notice purported to be 1st notice under section 15(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001. Subsequently in the month of October, 2011 appellant also preferred an application being C.M.A. No,10220 of 2011 in response to auction notices, appearing in "Dawn" and "Jang" dated 4-10-2011. It is contended that on issuance of the first notice dated 29-6-2011 the appellant has filed a suit in the month of July 2011 without wasting any time. The appellant has raised many grounds in their injunction application however for the purpose of deciding this appeal, the main grievances, of the appellant as raised by them at the time Of arguments are as under:-
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(i) Non-compliance of subsection (2) of section 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. (ii) The criteria laid down by the learned single Judge in the test for considering injunction application, itself is flawed and in violation of the provisions of subsection (1) of section 10 of the Ordinance, 2001 or in the alternative non application of the test prescribed in the impugned order to evaluate whether a case in facts or law is made out by the appellant for the grant. Of interim injunction. (iii) Non-reading of documents and statement of accounts to ascertain that no mortgaged money is due and payable. 4. Learned Counsel for the appellant in response to aforesaid points, stated that the recovery option can be initiated under section 15(4) of the. Ordinance 2001 without intervention of the Court provided the strict compliance of subsection (2) of section 15 of the Ordinance, 2001 is adhered. In this regard learned Counsel submits that the respondent by sending first notice of demand dated 29-6-2011 initiated proceedings for the alleged mortgaged money to be paid within 14 days of the service of notice. On receipt of such notice it was not only replied by the appellant but also instituted a suit for the accounts, declaration, redemption and recovery etc. The mechanism of section 15(2) of the Ordinance, 2001 is such that in case of failure to respond on the due date given in the 1st notice, the second. Notice to follow and then lastly the financial institution shall serve a final notice to the mortgager for payment of the mortgaged money. Learned Counsel submits that after filing of the suit the notices and summons were issued and served upon the respondents who filed an application for leave to defend and accordingly they filed leave to defend application in the month of September, 2011. However, such application is devoid of containing any fact of issuing second, and third notices as they were purported to have been issued on 16-7-2011 and 1-8-2011 respectively. Learned counsel for the appellant submitted that the provisions of subsection (2) of section 15 of the Ordinance 2001 are to be trictly complied with as being mandatory and relied upon the cases of Izhar Alam Farooqi v. Sheikh Abdul Sattar Last (2008 SCMR 240), Ms t. Shamim Akhtar v. Muhammad Riaz (2008 CLD 186), Haji Muhammad Yaqoob Akhtar v. Habib Bank Ltd. (2009 CLD 1699), Iftikhar Ahmed v. My Bank Ltd. Through President (2009 CLD 374). 5. It is contended that the first notice of demand was replied vide legal notice dated 1-8-2011 denying that any amount was due and outstanding and called for rendition of accounts. It is contended that the respondent allegedly issued second and third notices under section 15 of the Ordinance, 2001 which notices were not served upon the appellant and it came to his knowledge only when counter affidavit to injunction application was filed. He contended that in the impugned order it is said about these two disputed notices that were issued on or abuot 16-7-2011 and 1-8- 2011. Thus it appears that pursuant to the impugned order the said second and third notices were issued on 16-7-2011 and 1-8-2011 i,e, prior to the filing of the leave to defend application and after filing of suit. 6. Learned Counsel submitted that the word "on or about" used by the respondent creates clear ambiguity in the said dates as in the normal course a clear assertion with regard to the dates on which the notices have been issued, should have been made. Learned Counsel adding to the above submission contended that since leave to defend application was filed in September 2011 yet it did not disclose the fact of issuance of second and third notices on the above referred dates and consequently the auction notices were published in newspapers daily Jang and Dawn dated 8-10-2011 for the auction of the above referred two mortgaged properties. 7. Learned counsel for the appellant submits that the reasoning assigned in declining the relief with regard to one of the property pursuant to the provisions of subsection (2) of section 15 of the Ordinance, 2001 are not valid and lawful. Learned counsel submitted that the observation of the learned single Judge that the distinction is too fine to be drawn for the purpose for which
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subsection (2) has been enacted (i,e,, financial institution) for whom notices are to be sent. Learned Counsel for the appellant submitted that since it is .a special law therefore, its provision to be construed and implemented in the strictest possible terms. Learned counsel for the appellant submitted that the learned single Judge in view of the close similarity in the signatures of recipients, of the first and third notices, as relied upon by the respondents went on to conclude that the third notice was also received by the appellant as the 'recipients prima facie, appears to be the same person and since the receipt of the first notice was not denied therefore, prima fade the third notice was also said to be served. . 8. It is contended that the learned single Judge did not discuss the issue in the impugned order that the address on the receipt of the first notice was of an address in Jinnah Cooperative Housing Society Karachi and the address of third notice was of PECHS Karachi. Learned counsel submits that this went on to prove that the third notice which is disputed by the appellant was sent to a 'wrong address and the conclusion of the learned single Judge on the basis of close similarity in the signatures is on the basis of photocopies available on record, which is a presumptive conclusion. He argued that such conclusion is too fine, to be drawn and it ought to have been referred to the handwriting expert if at all signatures are required to be verified. 9. As regards the second notice learned counsel for the appellant submitted that the learned single Judge observed that the respondent candidly stated that the receipt for this notice has been misplaced and that the onus of establishing such fact that the second notice has been issued rests upon the financial institution which it must discharged should an objection be taken. Learned counsel further submitted that the courier receipts of 'the second notice has not been provided which has been allegedly lost by the respondent therefore, in view of such fact the presumption ought to have been drawn that no second notice has been sent teamed counsel for the appellant submitted that the learned single Judge in the same breath concluded that prima facie the second notice was also sent to the appellant as he Can see no reason why the respondent would go through the exercise of recourse and skipped issuing one of the required notices. Ultimately the learned single Judge concludes that all the three notices were sent and received by the appellant. Learned counsel submitted that the notices are a mandatory provision and holding service good on mere presumption is not correct. He submitted that the word "presumption" has been defined in, Black's Law Dictionary, Ninth Edition at page 1304 as under:-- (i) A legal inference or assumption that a fact exists, based on the known or proven existence of some other fact or group of facts. (ii) Most presumption are rules of evidence calling for a certain result in a given case unless the adversely affected party overcomes it with other evidence. 10. Learned Counsel further submitted that in subsection (2) of section 15 of the Ordinance, 2001 for the first and second notices the legislature used the word "send" whereas for the third notice the word "serve" has been used. Learned Counsel submits that the observation of the learned single Judge that in the impugned order these two words have interchangeably been used, is not correct appreciation as there is a deliberate intent on the part of the, legislature that the third and final notices should be served on the mortgagor for the reason that the word "serve" is also used in subsection (5) of section 9 of the Ordinance, 2001 wherein the intent of the legislature was initially that the service effected and the defendant therein should be made aware that the case has been filed against him/them as within the stipulated time a leave to defend application is to be filed. Thus in terms of subsection (5) of section 9 the intent is to ensure that opportunity is provided to file his defence after taking all possible efforts to effect service. 11. Similarly the word used in subsection (2) of section 15 of the Ordinance, 2001 for third notice is "serve" with the same intensity to ensure that the mortgagor should be aware that the proceeding under section 15 has been initiated against him and that the financial institution which is acting
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without interfering of the Court does not act arbitrarily and deny the mortgagor's due remedies in the Financial Institutions (Recovery of Finances) Ordinance, 2001 as admittedly there is no absolute bar in refusing to grant injunction against the banking companies pursuant to subsection (12) of section 15. Learned Counsel submitted that the word "serve" according to Black Law 'Dictionary, Ninth Edition at page 1491, is stated to be a verb while the word "service" according to Black Law' Dictionary Ninth Edition at page 1491, is stated to be a noun, hence both are interchangeable and thus have been used accordingly in subsection (5) of section 9 and subsection (2) of section 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. Learned counsel submitted that the ingredients of Order. V of C.P.C. Have not been met in terms of third notice for effecting valid service as envisaged by Rules 12 and 14 and another case on the male member of the family as provided in Rule 5 of Order V, C.P.C. Learned Counsel has relied upon the cases of Shakoor Hussain v. Muhammad Sadiq (1991 MLD 67) and Amin Khan v. University of Sindh (PLD 1968 Karachi 899). 12. The second point which has been argued by the learned counsel for the appellant is that the criteria that has been made to test the appellants case, which could pass the appellant in order to avail the relief as claimed. Learned counsel submitted that the test prescribed is flawed and the same is in violation of subsection (1) of section 10 of the Ordinance, 2001. He submitted that the yardstick, which is applied by the learned single Judge is not in consonance with the principles of injunction on which consideration the subject application is to be considered. Learned counsel for the appellant submitted that the leave to defend application is governed by the provisions of section 10(1) of the Ordinance, 2001 and in normal flow it is for to financial institution, which seeks leave to defend to show the substantial question of fact, which requires evidence to be led in response to the said question. Learned Counsel for the appellant submitted that the learned single Judge has placed the shoe on the other foot while laying down criteria of the test prescribed by him in para-8 wherein it is suggested that in order to engage subsection (12)(b) of section 15 of the Ordinance 2001, the appellant's (customer's) claim in plaint should be examined as if it was a leave to defend application filed in a suit by the financial institution. Learned counsel submitted that this proposition is in violation of section 10(1), C.P.C. And that the burden in the instant suit is on the financial institution who had filed leave to defend application. Learned counsel in the alternative also argued that the application of a test prescribed in the impugned order dated 22-5-2010 to evaluate whether a case in facts or law is made out by the appellant for the grant of interim unction is also violative of law. 13. Learned counsel argued that the non-reading of various documents and, statement of account which are on , record to ascertain contention that more money is due and in fact the appellant has paid in excess to the respondent is apparent. Learned counsel submitted that said ledger of account reflects transaction between the respondent and the appellants as there are total 305 Murabaha transaction out of which 278 Murabaha transactions have been settled -and as far as 27 Murabaha transactions are concerned, reference No, MR/NA/279 to MR/NA/291 are reflected in the ledger accounts and the remaining 14 Murabaha transactions are not reflected in the ledger accounts and these transactions are denied by the appellant in para-7 of the counter affidavit/replication to the leave to defend application. 14. On the other hand learned counsel for the respondent in reply to the issue of non-compliance of subsection (2) of section 15 of the Ordinance 2001, which relates to issuance of three notices submits that the stance of appellant in terms of para-3 of the rejoinder filed in relation to the injunction application is totally evasive as there is no specific denial of receipt of the second notice. In the same way, the appellant's denial of the service of notice dated 1-8-2011 which is designated as 3rd notice is also completely evasive in terms of para-3 of the rejoinder filed in response to the injunction application. Learned counsel submits that the denial has to be specific under O.VIII, Rules
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3 and 4, C.P.C. And an evasive denial amounts to an admission. Learned counsel submits that it was only a futile attempt to deny the service of notice in an evasive manner. 15. He argued that the it is common practice of the courier companies that they do not state complete addresses and names on receipts as these addresses and names are attached to packages and the address shown on the packages is in fact used for making deliveries, hence any short-fall in the address and name on the receipts are irrelevant for the purpose of effecting deliveries of such packages. He submits that even the first notice which is admittedly served upon the appellant issued by the same courier service as was used and engaged for 2nd and 3rd notices. He contended that the original receipts of first and third notices were examined by the learned single Judge during the hearing. Learned counsel submits that the insistence of appellant that the learned Single Judge ought to have referred the signatures on receipts to the handwriting expert instead of examining the same himself is also not tenable under the law. Learned single Judge has all the powers in view of the provisions of Article 84 of the Qanun-e-Shahadat Order, 1984 to compare the signatures, writing or seal. In this regard learned Counsel has relied upon (i) Messrs Waqas Electronics and others v. Allied Bank of Pakistan and others (1999 SCMR 85), (ii) Ghulam Rasool and others v. Sardarul Hassan and another (1997 SCMR 976), (iii) Muslim Commercial Bank Limited and another v. Aamir Hussain and another (1996 SCMR 464) and S.M. Zahir v. Pirzada Fazal Ali Ajmari (1974 SCMR 490),, 16. Learned counsel submitted that the arguments of the learned counsel for the appellant that the learned single Judge held the signatures to be similar and not identical are also not tenable under the law since no signature of the same person can be identical as in normal course each signature slightly varies from the other and it is on this yardstick the learned single Judge held that there is a close similarity in both the signatures which can be adjudged by naked eye. 17. Learned counsel submitted that the purpose of section 15 of the Ordinance 2001 is to inform the mortgagor that there has been default in payment of his obligations and to enable him to pay dues, settle the matter in order to avoid sale of the mortgaged property and seek remedy available under the law. Hence this is not a case in which subsection (2) of section 15 of the Ordinance 2001 has not been complied with. Learned counsel submits that section 15 of the Ordinance does not specify any particular form of a subject notice and a simple notice would be sufficient as long as it identifies the default and financial institution's intention to follow the process under section 15 of the Ordinance 2001. The service of notice dated 4-6-2011 available at page 665 and the letter dated 15-7-2011 available at page 2826 if read along with the notice dated 29-6-2011 available at pages 673 and 2847 which are clearly served upon the appellant, made compliance of section 15 of the Ordinance 2001 even if the two notices, which are under alleged dispute are excluded from consideration. 18. Learned counsel further submitted that the appellant also unsuccessfully argued that an attempt is made to create ambiguity with regard to the dates of notices by attributing the words "on or about". He submitted that the learned single Judge used these words as a manner of speech while recording submissions of the respondent. Learned Counsel for the respondent further relied upon subsection (12) of section 15 of the Ordinance 2001 which deals with the powers of the Banking Court and the High Court in relation to passing injunctive order restraining sale or proposed sale of the mortgaged property. 19. Learned Counsel submitted that the creation of mortgage on the mortgaged properties is admitted and accordingly the provision of clause (a) of subsection (12) of section 15 of the Ordinance, 2001 is not applicable. Similarly appellant claims that no amounts are payable by the appellant and hence relied on clause (b) of subsection (12) of section 15 of the Ordinance, 2001, is misconceived, and. Untenable. Learned Counsel submitted that a complete statement of account is filed and the appellant failed to question the entries in the said account. Learned Counsel
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submitted that in terms of subsection (12) of section 15 of the Ordinance, .2001 the appellant is required to show positive evidence that all amounts secured by mortgaged properties have been paid. He submitted that a large number of receipts have been attached twice and sometime thrice and as such the calculation is based on these misconceptions. Even these receipts, have no relevance with the Murabaha transaction and some receipts even do not pertain to the branch of respondent from where the facilities were availed. 20. Learned Counsel further submitted that the test with regard to the threshold that the mortgagor .Needs to cross in order to secure injunction on the basis of clause (b) of subsection (12) of section 15 of the Ordinance, 2001 is justified and lawful. He submitted that the test prescribed by the learned single Judge is lighter than the one he was required to cross to obtain injunction. Learned Counsel submitted that the injunction is a discretionary remedy and the exercise of such discretion cannot be set aside in appeal, unless it is found to be arbitrary and fanciful. 21. We have heard the learned counsel and perused the record. Before we discuss the first contention with regard to the compliance of section 15(2) of the Ordinance, 2001, we may discuss second and third point as raised by the learned Counsel for the appellant. 22. With regard to the application of subsection (12)(b) of section 15 the learned single Judge observed that in order to engage subsection 12(b) of section 15 of Ordinance 2001 the customers claim (in this case plaint) should be examined as a leave to defend application filed in a suit for recovery of amount by the financial institution. Therefore, the minimum test that was prescribed by the learned single Judge is whether a substantial question of fact and law is raised by the borrower or not. Certainly there has to be some criteria in this special law, which is required to be passed by the borrower/customer in his suit to succeed as far as the injunction application is concerned and we feel that perhaps a lighter test is prescribed by the learned single Judge as compared to the one, which is required normally in considering injunction applications i,e, prima facie case, balance of inconvenience and irreparable loss. If this would not be the criteria to be crossed by borrower in his suit for accounts, then it would be very convenient for every borrower to file suit for accounts and object recovery process. While applying the test, the appellant has only to show the substantial question of law and fact or to prima facie show that due money has been paid and since the appellant has failed to come up to the mark of this test, therefore, there is, no question of him passing a test, which is meant for injunction application, which in the present case is difficult than the one prescribed by the learned single Judge. Rightly said by the learned single Judge that mere statement that all money secured to the mortgage has been paid is not sufficient for the purpose of the clause (b) of subsection (12) of section 15 of the Ordinance, 2001. In terms of subsection (12) of section 15 of the Ordinance, 2001 the appellant is required to show a positive evidence that all amounts secured by the mortgaged property has been paid. With the assistance of the learned counsel we have minutely perused the receipts, which were available on record filed by the appellant as well as the statement of account filed by the respondent and there is no cavil to the proposition that many receipts of repayment have been filed in duplicate and triplicate. 23. From the statement of account it is prima facie clear that apart from the settled Murabaha transaction there are certain outstanding Murabaha transaction. Respondent filed of complete statement of account of all outstanding 27 Murabaha transaction and out of the 27 outstanding Murabaha transaction, the appellant has raised a dispute with regard to a total sum of Rs,1,109,531, in four Murabaha transactions which dispute itself is baseless as each Murabaha transaction has been signed by the appellant and thus he was barred from even producing any evidence contrary to the contents of written documents in terms of Articles 102 and 103 of Qanun-e-Shahadat Order, 1984. Out of the total outstanding of aforesaid 27 Murabaha transaction which comes to 127,040,570, the appellant disputed only 1,109,531 which is insignificant as far as the outstanding amount is concerned. In view of above submissions we therefore, conclude that the appellant have
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failed to establish their case for application, of proviso (b) of subsection (12) of section 15 of the Ordinance, 2001 and the findings of the learned single Judge are not required to be interfered as far as these two points are concerned. 24. Now we would deal with the first argument of the learned Counsel for the appellant which is the compliance of subsection (2) of section 15 of the Ordinance, 2001. 25. In order to appreciate the contentions of…
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