By this order I intend to dispose of C.M. No,54-B of 2004 filed by judgment-debtors 2 to 4 on 7-7- 2004 seeking recalling the order of this Court dated 4-6-2004 whereby their property at Kashmir/Egerton Road, Lahore was directed to be put to sale through auction, C.M. No,55-B of 2004 filed on 7-7-2004 praying for suspension of the order dated 4-6-2004, C.M. No,52-B of 2004 filed on 3-7-2004 under sections 7(a) and (b) of the Financial Institutions (Recovery of Finances)
Ordinance, 2001 read with Order XXI, rules 97 and 99, C.P.C. On behalf of. Messrs Citizens Investment Corporation (Pvt.) Limited C.M. No,62-B of 2004 filed on 21-7-2004 praying for stay of proceedings in the main Execution Petition No,2 of 2001, C.M. No,75-B of 2004 again filed on behalf of Messrs Citizens Investment Corporation (Pvt.) Limited on 9-9-2004 under section 19 of the said Ordinance and C.M. No,86-B of 2004 filed on behalf of M/s. Askari Leasing Limited on 15-9-2004 for vacation of stay dated 10-9-2004 whereby, in the meanwhile auction of the property in question was stayed at the request of Messrs Citizens Investment Corporation (Pvt.) Limited.
2. On 19-5-1997 Messrs Askari Leasing Limited filed a suit for recovery of Rs,4,27,86,602 against Messrs.', National Fibres Limited and its individual Directors namely S. Tahir Hussain, Mr. Nasir Hussain and S. Amir Hussain, all residents of Karachi. In the plaint it was claimed that a lease agreement between the said parties was entered on 22-3-1994 and on 13-4-1995 equitable mortgage was created through deposit of title deeds in favour of the plaintiffs inter alia through the following five documents:--
(1) Memorandum of Deposit of Title Deed dated 13-4-1995.
(2) Deed of Assignment to recover monthly rent from Schon Bank Ltd., Lahore dated 12-4-1995.
(3) Memorandum of Deposit of Title-Deed with schedule dated 22-3-1995.
(4) Third party Pledge Agreement of Shares with schedule dated 22-3-1995.
(5) General Power of Attorney dated 6-4-1995.
' The plaint was accompanied with an application for attachment before judgment under section 11 of the said Ordinance in respect of the property detailed in annexure with C.M. No,20-B of 1997. The property mentioned in annex (1) with the application was accordingly attached on 16-9-1997.
3. On 24-4-2000 this Court passed a final decree against the defendants in COS 9 of 1997 for the total amount as prayed for with a direction for return of leased machinery to the plaintiff in terms of the agreement. Mr. Muhammad Nawaz Abbasi, J. While decreeing the suit of the plaintiff observed that the defendants had earlier admitted their liability to the extent of Rs,3,34,12,719, therefore, leave to appear and defend the suit was allowed subject to the condition of payment of the said amount through his Lordship's order dated 17-2-2000 within one month. Paras 6 and 7 of that order reads as under:-- "6. The learned counsel, however, while addressing the Court accepted the liability of defendant No,1 to the extent of Rs,3,34,12,719 and stated that the said defendant is prepared to make the payment of the said amount to the plaintiff if he is given leave to appear and defend the suit qua the remaining claim of the plaintiff. Learned counsel for the plaintiff readily agreed to this offer and submitted that the leave to appear and defend the .Suit may be granted to defendant No,1 subject to his deposit the amount in question.
7. In the light of the admission of learned counsel representing defendant No,1 regarding the liability of said defendant to the tune of Rs,3,34,12,719 and the undertaking given by him to make the payment of the same voluntarily, I allow the application of defendant No,1 for leave to appear and defend the suit subject to the deposit of Rs,3,34,12,719 in cash within a period of one month from today."
' However, since the defendants failed to make the said payment, as noted above, the suit of the plaintiff was decreed in toto on 24-4-2000.
4. In June 2000 the decree-holder filed execution application under Order XXI, rule 10, C.P.C. For the execution of the decree on the basis of Fard Taliqa submitted in the Court on 26-6-2000. The judgment-debtors were issued notices in the execution petition on 27-6-2000, 20-9-2000 and 14- 5-2001. On 4-6-2004 Court auctioneers were appointed who made their first report on 21-6-2004.
On 7-7-2004 objections in the form of C.M.No,54-B of 2004 were made along with a prayer for stay of auction proceedings. On 3-7-2004 C.M. No,52-B of 2004 was filed by Messrs Citizens Investment Corporation (Pvt.) Limited, Karachi. While these applications were pending, the schedule of auction was published in the newspaper on 6-8-2004. On 10-9-2004 another objection petition was filed by Messrs Citizens Investment Corporation (Pvt.) .Limited, on which the auction proceedings were directed to be stayed. As noted above, the application for vacation of that stay was made by the decree-holder on 15-9-2004.
5. The petitioners in C.M. No,54-B of 2004, judgment-debtors Nos.2 to 4 state that they ceased to be Directors of the defendant No,1 in view of the order passed by Sindh High Court, Karachi on 4-12- 1997 and, therefore, their liability had come to an end. Also that Messrs National Finance Corporation of Pakistan having acquired the judgment-debtor company's assets by the order of the Honourable Sindh High. Court dated 7-9-2001 they had absolutely no concern with the Company and the impugned judgment and decree could not be executed against them. In para.8 of their application they have asserted that the property of Schon Bank, Kashmir/ ggerton Road, Lahore belongs to them which was never mortgaged with the decree-holder leasing Company.
Also they rely upon an N.O.C. Allegedly given by the decree-holder in some proceedings before the Sindh High Court. Thereafter, according to them the decree-holder had no authority or legal justification to execute decree against them.
6. The petitioner in C.M. No,52-B of 2004 Messrs Citizens Investment Corporation (Pvt.) Limited claim that they purchased the aforesaid building at Kashmir/Egerton Road, Lahore on 11-8-2003 by a registered sale deed from judgment-debtors 2 to 4 which was sought to be put to auction by the decree-holder. It is alleged that after the order of the Sindh High Court dated 4-12-1997 the individual Directors/petitioners in C.M. No,54-B 'of 2004 had no concern with the liability in question.
This application (C.M. No,52-B of 2004) in fact repeats all averments which were earlier made by the judgment-debtors 2 to 4 in objection petition/C.M. No,54-B of 2004.
7. The second application by Messrs Citizens Investment Corporation (Pvt.) Limited C.M. No,75-B of 2004 filed on 10-9-2004 states that the applicant was the creditor of Schon Textile Limited, Karachi and the judgment-debtors Nos.1, 2 and 3 were guarantors of the loan. Further that on default the applicant company filed a suit for recovery of 1,34,76,000 dollars and in the alternate sought specific performance for transfer of three properties before the High Court of Sindh at Karachi. That suit was filed on 3-5-2003 and was registered as Suit No,514 of 2003 in the Sindh High Court, Karachi. On 19-7-2003 it is claimed that an application under Order XXIII, rule 3, C.P.C. Was filed before the Honourable Sindh High Court, on which a learned Judge of that Court on 8-9-2003 passed a judgment and decree on the admission of the defendants that they admitted availing facilities as claimed in the suit and were willing to transfer the three immovable. Properties, one of these properties being Plot No,20-C, Kashmir/Egerton Road, Lahore measuring 2 Kanals, 5 Marlas and 41 sq. Ft. It is stated that in view of the compromise arrived at between the parties in the said Suit No,514 of 2003 and the decree dated 8-9-2003 the said property at Kashmir/Egerton Road, Lahore was not available for disposal in the present execution proceedings inasmuch as a sale- deed had earlier been registered in favour of the petitioner on 11-8-2003.
8. C.M. No,86-B of 2004, as noted above, seeks vacation of the said stay of auction proceedings dated 10-9-2004 as earlier made by the Court. It is alleged that firstly in view of the provisions of sections 15(12) and 23(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 this Court is neither competent to grant a stay nor any subsequent transaction after pronouncement of judgment by this Court could in any manner affect the rights of the decree-holders in the mortgaged property.
9. In reply to the objections of the judgment-debtors and other applicants learned counsel for the decree-holder relies upon a letter dated May 19, 2001 by the judgment-debtor Messrs National Fibres Limited addressed to the Chairman Leasing Corporation of Pakistan which inter alia states "we understand that Messrs Askari Leasing Limited (All) are not interested in transfer of shares as they hold property with enough value to recover their dues".
10. Heard the learned counsel for the parties. Learned counsel representing Messrs Citizens Investment Corporation (Pvt.) Limited claims that the property sought to be auctioned namely Plot No,20-C, Kashmir/ Egerton Road, Lahore was not mentioned in the plaint, that no prayer for sale of the mortgaged property was made as contemplated in section 14 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, that the plaintiff/ leasing company ought to have sought enforcement of mortgage, that the judgment and decree passed by this Court does not mention or gives the detail of the property allegedly mortgaged with the plaintiff, that the defendants Nos.2 to 4 were earlier proceeded ex parte in the suit on 29-7-1999 though they kept on participating in the proceedings but finally absconded, that the property in question having been purchased by the petitioner Messrs Citizens Investment (Pvt.) Limited in pursuance of judgment and decree passed by the Sindh High Court on the basis of a compromise between the parties is no more available for execution of the judgment and decree in question, that Messrs National Fibres Limited was taken over by Messrs NDFC and the arrangements so made absolved the judgment-debtors including judgment-debtors Nos.2 to 4 (Private individual Directors) of their guarantees. Learned counsel appearing for Messrs Citizens Investment Corporation (Pvt.) Limited in C.M. No,52-B of 2004 and C.M. No,54-B of 2004 on behalf of judgment-debtors Nos.2 to 4 have also supported the contents of their petition.
11. After hearing the learned counsel for the parties and on .Looking at the chronological order of events I will agree with the decree-holder that the aforesaid three petitions one by the judgment- debtors and two by the alleged third party (Messrs Citizens Investment Corporation (Pvt.) Limited) need to be dismissed for the following reasons:- - ' Firstly, the decree in question is almost consent decree in view of the admission of liability by the defendants, the company as well as the individual DirectoRs, The suit filed by the decree-holder was fully contested at the initial stage but after having admitted the liability and on making of default in payment of admitted liability by the defendants the impugned judgment and decree was passed by the Court on 24-4-2000. In the defence before the Court during trial, the defendants including. Defendants Nos.2 to 4 never either disowned the mortgaged property or otherwise raised any objection qua the taking over of the defendant No,1 by NDFC or that the defendants as guarantors were not liable for the lease rentals. Also no document stated in or attached with the plaint was seriously disputed.
' Secondly, the order of the Sindh High Court passed on 4-12-1997 does not in any manner affect the liability of the judgment-debtor company as well as the individual Directors as the decree- holder Messrs Askari Leasing was never a party to the proceedings as it had already filed the suit in question on 19-5-1997. Also there is nothing on record to show that the order of the Sindh High Court at Karachi dated 7-9-2001 in Suit No,64 of 2000 re. Messrs.', NDFC v. Messrs National Fibres Limited and its Directors, in any manner impaired the surety of the petitioner in the mortgage created in its favour with respect to the said property.
' Thirdly, it is not correct to state that the plaint in original suit did not even mention the property which was alleged to have been in equitable mortgage with the decree-holder. Not only that the plaint makes a specific reference to the creation of the equitable mortgage but also the schedule given in the application for interim relief expressly mentions the property in question. It is also not legally correct to claim that in such situation only a suit for enforcement of mortgage and not for recovery could have been filed. The claim of the decree-holder that the property mentioned in annex-I C.M. No,20-B of 1997 made with the plaint stood attached by this Court w,e,f, 19-6-1997 is supported from the record. That attachment continued till the judgment and decree of the Court and, therefore, there was no need for making of the fresh attachment order after passing of the decree. Accordingly the precept issued by this Court on 20-5-2003 requiring the District Judge Lahore to attach the property in question located at Egerton Road, Lahore was a mere confirmation of the earlier order dated 19-6-1997 made during the pendency of the suit.
' Fourthly, the first two applications C.M. No,54-B of 2004 by the individual Directors/judgment- debtors and C.M. No,52-B of 2004 by Messrs Citizens Investment Corporation (Pvt.) Limited on the face of it appear to have been filed by one and the same party. Its contents are almost identical.
C.M. No,52-B of 2004 was moved by Investment Corporation on 5-7-2004. In the application the filing of the suit for recovery bearing No,514 of 2003 on 3-5-2003 before the Sindh High Court was actively suppressed. In the whole application the stress remains on the fact that the petitioner has purchased the property in question on 11-8-2003 by way of a registered sale-deed. However, filing of the suit and the application for compromise under Order XXIII on 19-7-2003 has not even been mentioned. It.. Is also interesting to note that, the parties namely petitioner in the last mentioned two C.Ms. Messrs Citizens Investment Corporation (Pvt.) Limited and the judgment-debtors Syed Tahir Hussain etc. Made an application under section 23(3), C.P.C. Before the Sindh High Court on 19-7-2003. That application/compromise was converted into judgment and decree of the Honourable Court on 8-9-2003 which inter alia provided for an agreement on the part of the present judgment-debtors (defendants in the suit) to transfer the three properties in favour of the plaintiff which included the property in question. However, factually. The impatient/plaintiff Messrs Citizens Investment Corporation (Pvt.) Limited had already got transferred in its name the property in question on 11-8-2003 which was almost a month before the passing of the said judgment and decree by the Honourable Sindh High Court. This very fact supports the claim of the petitioner that the civil suit filed by petitioner Messrs Citizens Investment Corporation (Pvt.) Limited before the Honourable Sindh High Court on 3-5-2003 and the application for a compromise made only after two months on 19-7-2003 and finally decreed on 8-9-2003 was collusive and only a devoice to defeat the judgment and decree passed against the judgment-debtors 2 to 4. That fact also belies the claim of the petitioner Messrs Citizens Investment Corporation (Pvt.) Limited that the transfer of property in question in its favour has been a result of the judgment and decree passed by the Honourable Sindh High Court.
' Fifthly, for the decree-holder it is stated that Messrs Citizen Investment Corporation (Pvt.) Limited which claimed to have entered into said loan facility in foreign currency to the tune of 1,34,76,000 Dollars as also in the alternate for transfer of the immovable properties in the year, 1999 was itself incorporated at Karachi vide Registration No,K-09386 of 2000/2003 on 4-6-2003. There is also nothing on record to show that the two other properties, which were also subject matter of the said Suit No,514 of 2003 and were directed to be transferred by way of compromise were actually transferred in the name of the present petitioner a decree-holder in the said suit. The day, date, time and the method in which that part of the judgment and decree passed by the Sindh High Court was executed has not been brought on record. The very contents of the plaint in the said Suit No,514 of 2003 alleging advancement of a loan facility in foreign exchange and then on default its conversion into an agreement to sell smacks of an arrangement as noted above. There .Is nothing on record to show if the other two properties, besides the one in question situated at Lahore were also transferred in favour of the plaintiff either before or after the decree in the said suit.
' Sixthly, the decree-holder having an equitable mortgage which was supported by the documents mentioned above has all the justification in the world to seek the execution of the decree through sale of that property. In a similar situation this Court in re. Mst. Imtiaz Akhtar and another v. Habib Bank Limited, Sialkot 2002 CLD 101 refused to entertain the plea advanced by the interveners against execution of decree for sale of mcr tgaged property. And.
' Lastly, the judgment-debtors Nos.2 to 4 are stated to have fled the country quite some time back.
The C.M. No,54-B of 2004 is not supported by any document executed in favour of the alleged general attorney. The claim of the decree-holder/ bank that the alleged attorney who acted on behalf of judgment-debtors Nos.2 to 4 while executing the sale-deed of the property in question in favour of the applicant namely Messrs Citizens Investment Corporation (Pvt.) Limited on 11-8-2003 was the same person who at one time also held him out to be an attorney of Messrs Citizens Investment Corporation (Pvt.) Limited needs to be noted though an inquiry into that allegation is not possible in these proceedings.
12. On the basis of the above I have concluded that the judgment-debtors Nos.2 to 4 are trying to use the process of law and of the Court only in order to defeat the judgment and decree earlier passed against them on their admission of liability. The three applications are frivolous to say the least. In my view these applications intend to obstruct rather to advance or assist the process of law and justice. These shall accordingly be dismissed with costs.
13. Messrs Citizens Investment Corporation (Pvt.) Limited if at all they have any right in the property in question it shall only be subject to and after payment and recovery of the decretal amount to the decree-holder. The decree-holder is also allowed its prayer made in C.M. No,47-B of 2004 to compete in the auction proceedings subject to the condition that its bid will not be less than the amount it had earlier conveyed to the Court auctioneers as reserve price. The Court auctioneers will proceed to issue a fresh auction schedule and put the suit property to auction for recovery of the decretal amount.
14. To come up for report of the Court auctioneers on 16-12-2004.