' 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 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 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.
(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 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.
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 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 favour of the Bank in lieu of such loan facilities which would remain mortgaged as long as the liabilities are reimbursed and; the mere fact that at the time of entering into agreement no such provision was available in the relevant law i,e, the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, XV of 1997 does not mean that the contractual obligation of the borrower to repay the loan also expired. The duty still remains and continues till the loan liability is discharged as required by the terms of agreement, therefore, non-payment of loan dues is a continuing breach of duty and the obligation and is a continuing default, as such; no question of retrospectivity is involved as long as the same remained undischarged. In this regard we are fortified by the observation made by the Honourable apex Court in the judgment reported in PLD 2001 SC 607 wherein retrospectivity of NAB Ordinance in respect of its applicability to the loan or default committed prior to the promulgation of the Ordinance were examined and the Honourable Supreme Court held as under:-- "The matter may be looked at from another angle as well. The mere fact that at the time of entering into an agreement no punishment was prescribed for default in payment of loan or bank dues, as the case may be, cannot possibly mean that the duty of the defaulter to re-pay the loan/dues also expired. The duty still remains. It continues till the loan/dues are re-paid asrequired under the agreement. Therefore, non-payment of loan/dues in terms of the agreement within the contemplation of section 5(r) is a continuing breach of duty or obligation, which itself is continuing if duty to re-pay the loan/dues as aforesaid continues from day to day and the non-performance of that duty/obligation from that point of view must be held to be a continuing default in the repayment of loan. Therefore, if it is continuing, there is a fresh starting point of limitation every day as the wrong continues. Viewed from this angle, there is no limitation and no question of retrospectivity involved as long as the duty remains undischarged."
15. Adverting to the question of constitutionality of section 15 of the Ordinance, 2001 it may be seen that two remedies are available to the Bank under the Ordinance, 2001 for realizing the outstanding amount, provided in section 9 and section 15 of the Ordinance. Section 9 reads as under:-- "Procedure of Banking Courts.---(1) Where a customer or a financial institution commits a default in fulfilment of any obligation with regard to any finance, the financial institution or, as the case may be, the customer, may institute a suit in the Banking Court by presenting a plaint which shall be verified on oath, in the case of financial institution by the Branch Manager or such other officer of the financial institution as may be duly authorized in this behalf by power of it journey or otherwise.
(2) The plaint shall be supported by a statement of account which in the case of a financial institution shall be duly certified under the Bankers' Books Evidence Act, 1891 (XVII of 1891), and all other relevant documents relating to the grant of finance. Copies of the plaint, statement of account and other relevant documents shall be filed with the Banking Court in sufficient numbers so that there is one set of copies for each defendant and one extra copy.
(3) The plaint, in the case of a suit for recovery instituted by a financial institution, shall specifically state--
(a) the amount of finance availed by the defendant from the financial institution;
(b) the amounts paid by the defendant to the financial institution and the dates of payment; and
(c) the amount of the financial and other amounts relating to the finance payable by the defendant to the financial institution up to the date of institution of the suit.
(4) The provisions of section 10 of the Code of Civil Procedure, 1908 (Act V of 1908), shall have no application for an in relation to suits filed hereunder.
(5) On a plaint being presenting to the Banking Court, a summons in Form No,4 in Appendix 'B' to the Code of Civil Procedure, 1908 (Act V of 1908) or in such other form as may, from time to time, be prescribed by rules, shall be served on the defendant through the bailiff or process-server of the Banking Court, by registered post acknowledgement due, by courier and by publication in one English language and one Urdu language daily newspaper, and service duly effected in anyone of the aforesaid modes shall be deemed to be valid service for purposes of this Ordinance. In the case of service of the summons through the bailiff or process-server, a copy of the plaint shall be attached therewith and in all other cases the defendant shall be entitled to obtain a copy of the plaint from the office of the Banking Court without making a written application but against due acknowledgment. The Banking Court shall ensure that the publication of summons takes place in newspaper with a wide circulation within its territorial limits."
' Section 15 provides as follows:--- "15. Sale of Mortgaged property.--- (1) In this section, unless there is anything repugnant in the subject or context--
(a) "mortgage" means the transfer of an interest in specific immovable property for the purpose of securing the payment of the mortgage money or the performance of an obligation which may give rise to a pecuniary liability;
(b) "mortgage money" means any finance or other amounts relating to a finance, penalties, damages, charges or pecuniary liabilities, payment of which is secured for the time being by the document by which the mortgage is effected or evidence, including any mortgage deed or memorandum of deposit of title deeds; and
(c) "mortgage property" means immovable property mortgaged to a financial institution.
(2) In case of default in payment by customer, the iancial institution may send a notice on the mortgagor demanding payment of the mortgage money outstanding within fourteen days from service of the notice, and failing payment of the amount within due date, it shall send a second notice of demand for payment of the amount within fourteen days. In case the customer on the due date given in the second notice sent, continuous to default in payment, financial institution shall serve a final notice on the mortgagor demanding the payment of the mortgage money outstanding within thirty days from the service of the final notice on the customer.
(3) When a financial institution serves a notice of demand, all the powers of the mortgagor in regard to recovery of rents and profits from the final mortgaged property shall stand transferred to the financial institution until such notice is withdrawn and it shall be the duty of the mortgagor to pay all rents and profits from the mortgaged property to the financial institution: Provided that where the mortgaged property is in the possession of any tenant or occupier other than the mortgagor, it shall be the duty of such tenant or occupier on receipt of notice in this behalf from the financial institution, to pay the rent or lease money or other consideration agreed with the mortgagor to the financial institution.
(4) Where a mortgagor fails to pay the amount as demanded within the period prescribed under subsection (2)m and after the due date given in the final notice has expired the financial institution may without the intervention of any Court, sell the mortgaged property or any part thereof by public auction and appropriate the proceeds thereof towards total or partial satisfaction of the outstanding mortgage money: ' Provided that before exercise of its powers under this subsection, the financial institution shall cause to be published a notice in one reputable English daily newspaper with wide circulation and one Urdu daily newspaper in the Province in which the mortgaged property is situated, specifying particulars of the mortgaged property, including name and address of the mortgagor, details of the mortgaged property amount of outstanding mortgage money, and indicating the intention of the financial institution to sell the mortgaged property. The financial institution shall also send such notices to all persons who, to the knowledge of the financial institution, have an interest in the mortgaged property as mortgagees.
(5) The financial institution shall be entitled, in its discretion, to participate in the public auction, and to purchase the mortgaged property at the highest bid obtained in the public auction.
(6) Where the mortgagor or his agent or servant or any person put in possession by the mortgagor or on account of the mortgagor does not voluntarily give possession of the mortgaged property sought to be sold or sought to be purchased or purchased by the financial institution, a Banking Court on application of the financial institution or purchaser shall put the financial institution or purchaser, as the case may be; in possession of the mortgaged property in any manner deemed fit by it: ' Provided that the Banking Court may not order eviction of a person who is in occupation of the mortgaged property or any part thereof under a bona fide lease, except on expiry of the period of the lease, or on payment of such compensation as may be agreed between the parties or as may be determined to be reasonable by the Banking Court."
16. It has not been provided by the law that there can be only one remedy available for recovery of loans, advances etc. From defaulters namely recourse through Courts. Any statute may in appropriate cases provide for more than one remedy against a defaulter for recovery of the dues or it may be that various modes for recovery have been or can be provided in different enactments. Special remedies may be available in favour or against a particular class of persons.
Where in a statute or special enactment two or more remedies have been provided against the same defaulter, the powers so conferred and exercisable ipso facto cannot be termed as an arbitrary and unreasonable provision of law and more particularly for the reason that when guidelines to control the discretionary powers to be exercised have been given, which need not necessarily be specifically enumerated in the very section or provision conferring such powers. The guidelines can be gathered from the other provisions of the Act the preamble and the ID surrounding circumstances. While interpreting section 69 of the Transfer of Property Act, 1882, empowering mortgagee to take over the mortgaged property, the Honourable Court in its judgment reported in AIR 1955 Mad. 455, observed as under:-- "It is quite true that under section 69, T.P. Act, where an express power to sell is conferred upon the mortgagee, he need not seek the intervention of Court. But this does not mean that it may not be done. Section 69 regulates the procedure for private sale of mortgaged property. (See the unreported decision of this Court in ... 'T.S. Ranaswamy v. Gangadhar Bhatt', Writ Petition No,308 of 1953, decided on 24-4-1953 AIR 1955 NU C (Mad.) 1828(A), by T.L. Venkatrama Iyer, J.). But Courts are not to act upon the principle that every procedure re has to be taken as prohibited unless it is expressly provided for, but are to act on the converse principle that every procedure is to be understood as permissible till it is shown to be prohibited by the law. As a matter of general principle, prohibitions cannot be presumed. Every Court must, in the absence of an express provision to the contrary, be deemed to possess inherent in itself such powers as are necessary to do right and to undo wrongs in the course of administration of justice."
17. Before dilating upon the contention as to whether the provisions contained in section 15 were validly enacted, we may observe that there is a presumption in favour of the validity of a statute, and Courts of law have to presume that the particular law is intera vires and not ultra vires. It is also to be presumed that the power conferred and shall be exercised for the purpose for which it has been conferred and shall be exercised reasonably. The presumption is in favour of the constitutionality of an enactment and the burden is upon him, who questioned its validity to show that there has been a transgression of constitutional principles.
18. There cannot be any absolute standard for determining reasonableness of a law. It has to be judged with reference to the prevailing circumstances when the particular evil is sought to be remedied. In order to see as to what necessitated to enact provisions of section 15 of the Ordinance, 2001 empowering the Bank to sell out the mortgaged properties in lieu of outstanding amount, the prevalent circumstances at the time of enactment of Ordinance, 2001 has to be taken into account which could not be described in better words than observed by Honourable apex Court in the judgment reported in PLD 2001 SC 607 wherein vires of National Accountability Ordinance, 1999 were challenged, containing a provision for criminal prosecution of the persons who committed wilful default in respect of bank loans. The Honourable apex Court observed as under:- "For the last several years there has been tremendous increase in allegations of massive corruption against divergent strata of the society. The necessity for creating the offence of 'wilful default' arose because in the past the prosecution agency and other Government agencies had not properly carried out their public duty to investigate the offences disclosed due to the alleged involvement of several persons holding high offices in the executive, public offices, etc. Indifferent/casual attitude of the concerned agencies to conduct and proceed with the investigation is understandable. This is, indeed, a grave situation. This Court can take judicial notice of the fact that great loss of public revenue owing to enormous corruption and failure to recover the looted money through huge bank loan defaults pose a serious threat to economic life, financial stability, credit and security of Pakistan including the unity and integrity of the nation. These are the circumstances in which the vires of the impugned Ordinance are to be judged, which was promulgated for an expeditious and thorough probe into corruption and corrupt practices and holding accountable those accused of such practices, which had already been delayed for several decades. The validity of the impugned Ordinance is also to be judged keeping in view the extraordinary circumstances prevailing in the country and the adverse impact of lacking probity in the public life leading to highest degree of corruption. Such a situation has also adversely affected the foreign investment and funding from the International Monetary Fund as well as the World Bank who have warned that future aid to Pakistan shall be subject to the requisite steps being taken to eradicate corruption. If the pervading corruption in the society is permitted to continue unchecked it would lead to economic disaster.
' It was on 12th October, 1999, that the situation prevailing in the country in the sphere of economic debacle was recognised. The factors leading to the above situation on the ground, included the acts and omissions of persons who were the Members of the National and Provincial Assemblies, the Senate, the Civil Services, in business and/or working for gain in other disciplines in the country."
' It was further observed:-- "Yet another factor, which is to be taken into consideration while judging the validity of the impugned Ordinance would be that one of the grounds on which validation and legitimacy was accorded to the present regime as stated in the case of Zafar Ali Shah (supra) was that the representatives of the people, who were responsible for running the affairs of the State were themselves accused of massive corruption and corrupt practices in the public as well as private spheres and were benefiting therefrom. They were resisting the establishment of good governance.
There was a general perception that corruption was being practised by diversified strata including politicians, parliamentarians, public officials and ordinary citizens and there was no political and economic stability in the country. The bank loan defaults were rampant, in that, as per report of the Governor, State Bank of Pakistan, Rs,356 billion were payable by the bank defaulters up to 12-10- 1999. There being no accountability and transparency, economic stability in the country was highly precarious and there was an overall economic slowdown as GDP growth during the past three years had hardly kept pace with the growth of population and that Pakistan has a debt burden which equals the country's entire national income."
' In another judgment reported in PLD 1997 SC 582 the following guidelines were provided for the Courts while interpreting laws pertaining to economic activities:-- "(i) That in view of wide variety of diverse economic criteria, which are to be considered for the formulation of a fiscal policy, Legislature enjoys a wide latitude in the matter of selection of persons, subject-matter, events, etc. For taxation. But with all this latitude certain irreducible desiderata of equality shall govern classification for differential treatment in taxation law as well.
(ii) That Courts while interpreting laws relating to economic activities view the same with greater latitude than the laws relating to civil rights such as freedom of speech, religion etc. Keeping in view the complexity of economic problems which do not admit of solution through any doctrinaire or strait jacket formula as pointed out by Holmes, J. In one of his judgments.
(iii) That Frankfurter, J., in Morey v. Doud (1957) U.S. 457 has remarked that "in the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial deference to the legislative judgment"; (iv)
(v)
(vi)
(vii)
(viii) That while interpreting constitutional provisions Court should keep in mind, social setting of the country, growing requirements of the society/nation, burning problems of the day and the complex issues facing the people, which the Legislature in its wisdom through legislation seeks to solve. The judicial approach should be dynamic rather than static, pragmatic and not pedantic and elastic rather than rigid.
(ix) That the law should be saved rather than be destroyed and the Court must lean in favour of upholding the constitutionality of a legislation keeping in view that the rule of constitutional interpretation is that there is a presumption in favour of the constitutionality of the legislative enactments unless ex facie it is violative of a constitutional provision.
19. The provisions contained in section 15 are neither innovation or novel as similar provisions already exist in a number of statutes, such as; section 69 of Transfer of Property Act, 1882, wherein a mortgagee can sell mortgaged property without intervention of the Court and he may not file a suit for that purpose in a Court of law, but this does not mean that it cannot be done at all. If he finds any difficulty in proceeding without assistance of the Court, he may take a decision to go to a Court of law, but it is a decision of the mortgagee and at this stage no quasi-judicial function is involved. Similar provisions are also available in section 40 of the Industrial Development Bank of Pakistan Ordinance, 1961, empowering the Bank to take over the management of hypothecated goods etc., in case the industrial concern makes any default in payment or, fails to comply with the terms of its agreement with the Bank.
20. Thus, it cannot be said that the provisions of section 15 are innovation or alien to the statute book.
21. In India, section 29 of State Financial Corporation Act (LXIII of 1951) also contains similar provisions giving right to the Financial Corporation to take over the management or possession or both of the industrial concern as well as the right to transfer by way of lease or sale and realize the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation where an industrial concern, which is under a liability to the Financial Corporation under an agreement, makes any default in repayment of any loan or advance or any instalment thereof or meeting with its obligation in relation to any guarantee given to the Corporation or otherwise fails to comply with the terms of agreement with Financial Corporation. Subsection (5) of section 29 provides that where the Financial Corporation has taken any action against an industrial concern under the provisions of subsection (1), the Financial Corporation shall be deemed to be the owner of such concern for the purpose of suits by or against the concern and shall be sued and be sued in the name of the concern. The constitutionality of said section was challenged in the case reported in AIR 1990 Gujarat 105, while holding the same as valid law, it was observed as under:-- "It would, thus, be clear that when the Corporation decides to resort to section 29 of the Act and lakes any action under that section, it is not entering upon any adjudicatory or quasi-judicial function. It is a decision by a party to the agreement as to what kind of steps for speedy recovery should be taken and whether the assistance of the Court is necessary. Just as a mortgagee under section 69 of the Transfer of Property Act can take decision to proceed under section 69 and if he finds any difficulty in proceeding without the assistance of the Court, it may take a decision to go to a Court of law. But it is the decision of the party to the agreement and at that stage, no quasi- judicial function is involved. Similarly, when the corporation takes its administrative decision as to the course of action to be taken and followed it is not exercising any quasi-judicial function."
'The arguments of reasonableness is based more on apprehension than on reality and is merely in the abstract. Section 29 has to be read in a reasonable manner and in a proper perspective. Every legislation has a perspective which has to be read into every provision of the Act. Every provision is intended to further the perspective of the legislation. Section 29 can be resorted to only when the condition precedent of default in payment or breach of condition of the agreement is there.
Therefore, it is not that at any time without fulfilling the condition, action is to be taken. Even such an action has to be taken fairly i,e, after giving reasonable notice, time and opportunity to the defaulter to explain and/or reply and/or to comply. Even thereafter, the public Corporation has to act fairly as a reasonable and prudent person and as a trustee after taking over possession and while effecting sale. It cannot be said that the Corporation is authorized by section 29 to sell the property for whatever price and by whatever method. While the Corporation is taking over possession or management and affecting sale, whether by negotiations or auction, is acting as a trustee and would act as a reasonable and prudent person as if the properties were its own and try to fetch the maximum price. If in any these acts, the authority of the corporation goes wrong or acts illegally that action may be open to challenge before and after such action, in a Court of law and the aggrieved person is not without any remedy. We are, therefore, of the opinion that section 29 is not arbitrary, irrational or unreasonable and is not violative of Articles 14, 19, 21 and 300-A of the Constitution."
22. Sufficient safeguards and guidelines have been provided in the section itself. Proviso to subsection (4) of section 15 provides that before taking action under said subsection, the financial institution shall cause to be published a notice in one of the reputable English Daily Newspaper widely circulated and one in Urdu Newspaper in the Province in which the mortgaged property is situated specifying particulars of the mortgaged property including name and address of the mortgagor, details of the mortgaged property, amount of outstanding mortgaged money and indicating intention of the financial institution to sell the mortgaged property. Besides sending such notices to all persons, who have an interest in the mortgaged property as mortgagees, has been made mandatory. Likewise subsection (9) provides that any surplus left after paying in full all the dues of the mortgagees shall be paid to the mortgagor. Further safeguard has been provided under subsection (10) of section 15, whereby it has been made mandatory for a financial institution, which has sold mortgaged property to file proper accounts of the sale proceeds in a Banking Court within 30 days of the sale.
23. Coming to the contention of the learned counsel that the provisions contained in section 15(4) so far it permits sale of mortgaged property without intervention of a Court is ultra vires of the Constitution for the reasons as it gives power of a Court of law to the Bank by creating a parallel and arbitrary judicial system offending Articles 4 and 175 of the Constitution, it may be seen that under section 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001, a customer can file a suit against the financial institution in the Banking Court, if we read it together with subsection
(12) of section 15 which provides, neither the Banking Court nor High Court shall grant an injunction restraining the sale or proposed sale of mortgaged property, unless it is satisfied that no mortgage in respect of the immovable property has been created or all moneys secured by mortgage of the property have been paid or the mortgagor or objector deposited in Banking Court in cash outstanding mortgaged money. The words "proposed sale" suggest that these provisions are also applicable to a pre-sale dispute and not confined to post-sale dispute as contending by learned counsel for the petitioner. Similarly subsection (11) of section 15 stipulates that all disputes relating to the sale of mortgaged property under this section including dispute amongst mortgagees in respect of the distribution of the sale proceeds shall be decided by the Banking Court, thus; the jurisdiction of Banking Court has not been completely ousted and the customer can even after issuance of notices provided under subsection (2) of section 15 approach to the Banking Court in case he disputes his liabilities, therefore, the question of creating a parallel judicial system does not arise. However; it has been left to the choice of Bank either to press into service the provision of section 15 or to brinp a suit as provided under section 9 of the Ordinance, 2001. As - ready observed similar provision in the shape of section 69 of Transfer of Property Act are prevalent in the country for the last more than hundred years, as such; it cannot be said that the provisions providing sale of mortgaged property without intervention of the Court, incorporated in Ordinance, 2001 are unreasonable and arbitrary, particularly keeping in view the circumstances as highlighted in the reported judgment of the Honourable Supreme Court referred to above, which necessitated for the enactment of such provisions.
24. Similarly, while couching language of section 15, Legislature has kept in mind the principle of natural justice as before taking action under section 15(4), the Bank is required to issue three notices; first notice demanding payment of the mortgaged money outstanding within 14 days from service of notice and failing payment of the amount within due date to send a second notice of demand for payment of amount within 14 days. In case, the customer continues to default in payment despite second notice, the financial institution has to serve a final notice on the mortgagor demanding payment of the mortgaged money outstanding within 30 days from service of the final notice on the customer. In the judgment reported in AIR 1990 Gujarat 105 while dealing with question of principles of natural justice it was observed as under:-- "It is, thus, clear that even though the decision of the Corporation under section 29 is not a quasi- judicial, but is an administrative function, nonetheless, a reasonable reading of section 29 does not exclude the principle of fair play and some element of natural justice. It need not be an elaborate procedure of personal hearing, exchange of pleadings, leading of evidence, cross-examination of witnesses. It is not even be a regular show-cause notice, but a notice to the party bringing to its notice the default position and the consequences following therefrom of inviting action under section 29 of the Act has to be given so that the party has reasonable time and opportunity to explain, reply or comply with the same. After considering the response, if any from the party, it is open to the Corporation to arrive at its own decision. The party may point out in reply about the default position and/or may offer substantial part payment and offer reschedulement of repayment supported by its financial working and cash flow for the past period as well as, as projected in future. If the corporation is satisfied that the debtor has been bona fide, trustworthy and creditworthy and because of genuine difficulties, it wants reasonable reschedulement after substantial part payment, the corporation will consider the same in accordance with its policy of encouraging and assisting the industrial growth of viable industrial units and if the corporation is of the opinion that the industrial unit does not fulfil its policy requirement, the Corporation may proceed further under section 29 in accordance with law, but in that case, it would be acting fairly, reasonably and in accordance with the principles of natural justice and not arbitrarily. As stated earlier in the Supreme Court judgments, the principles of natural justice in administrative decision are the principles to act fairly. If that is done, the Corporation can proceed further in accordance with the provisions of section 29 of the Act. If such action is in breach of the principles of natural justice i,e, to say the Corporation did not act fairly, then that action could be challenged, but that would not vitiate the legal provision contained in section 29 of the Act."
25. The contention of the learned counsel for the petitioner that the word "default" used in subsection (2) of section 15 would have the same meaning as defined in subsection (3) section 3 has no substance in view of the language used in subsection (3), which provides "for purpose of this section, a judgment against a customer under this Ordinance shall mean that he is in default of his due duty under subsection (1)". The words "for the purpose of this section" make it manifest that the definition of "default" given in subsection (3) of section 3 only relates to section 3 and is not applicable to the word "default" used in subsection (2) of section 15, which provides that in case of default in payment by customer, the financial institution may serve a notice on the mortgagor demanding payment of mortgaged money outstanding. The words "default in payment" used in subsection (2) is in respect of mortgaged money outstanding against a customer, which has been defined in subsections (1)(b) of section 15, according to which "mortgaged money" means any finance or other amounts relating to a finance, penalties, damages, charges or pecuniary liabilities, payment of which is secured for the time being by the document by which mortgage is effected or evidenced including any mortgage deed or memorandum of deposit of title deeds.
' In view of above discussion we are of the considered view that the words "default in payment of mortgaged money" used in section 15 cannot be given the same meaning as defined in section 3(3).
According to the Bankers' Books Evidence Act, 1891, a statement of accounts carries presumption of truth, therefore, if any liabilities have been shown in the said statement, the same would be presumed to be true, unless contrary is proved, therefore, on the basis of statement of account, the Bank can issue demand notice as envisaged in subsection (2) of section 15, if it decides to proceed under section 15(4) to sell the mortgaged property without intervention of the Court.
26. It may also be seen that absolute and unrestricted individual rights do not exist in a modern State and there is no such thing as absolute and uncontrolled liberty. The collective interest of the society, peace and security of State and the maintenance of public order are of paramount importance in an organized society, if the State is in danger, the liberties of the people are themselves in danger. It is for these reasons that an equilibrium has to be maintained between the two contending interests at stake, (1) the individual liberties and the fundamental rights of citizens and the other need to impose social control and reasonable limitation on the enjoyment of those rights in the interest of collective good of the society. Article 25 guarantees for equality of all citizens before law and their entitlement to get equal protection, but equality of citizen does not mean that all law must apply to all the subjects or that all the subjects must have the same rights and liabilities. Therefore, treating of a class of citizens differently from another class, which was not similarly situated, would not offend against the fundamental rights of equal protection of law.
However; such classification should be reasonable. In the context if we see the provisions of section 15 it is manifest that these provisions are applicable only to the class of those individuals, who have mortgaged their properties in order to obtain finance facilities/loans, but failed to repay the amount as agreed and are defaulters, whereas; for other classes of customers, whose loans are not based on mortgage, the Bank has to file suit under section 9 of the Ordinance, 2001, which is a reasonable classification. In the judgment reported in PLD 1989 Quetta 8 it was observed as under:- "Article 25 of the Constitution deals with 'equality of citizens' and 'equal protection of law'. Equality of citizens does not mean that all laws must apply to all the subjects or that all subjects must have the same rights and liabilities, that a citizen's rights as a human being are not affected by reason of his descent, religion, social or official status, economic condition or place of birth or residence; and further that all citizens are equally subject to the general law of the land. This clause permits classification and as a matter of fact classifications are always proceeded on inequality because it cannot be assumed that citizens of a State are alike by nature or circumstances to one and another.
'Equal protection' of law means that no person or class of persons shall be denied the same protection of laws which are enjoyed by other person or persons or class or classes in same circumstances. This constitutional guarantee in fact requires that all persons shall be treated alike under like and similar conditions. It connotes that equal protection of law means in similar circumstances, the same law will apply to the same class of peoples."
In view of above discussion we are of the considered view that the provisions contained in section 15 are neither aimed to militate Articles 4 and 175 of the Constitution nor the same could be termed to be arbitrary, discriminatory and despotic provisions.
' For the foregoing reasons, we find no merits in the petition, which is dismissed accordingly.