SARMAD JALAL OSMANY. J.---The facts in this matter are that the petitioner had applied to the State Bank of Pakistan under BPD Circular No-29 for settlement of its liabilities to respondent No-4/Bank.
Such application was processed by the Committee formed under aforestated Circular and eventually it passed the impugned order whereby it was directed that the liability should be settled on payment of Rs.2,30,775 million being 75% of the total liability of Rs.3,07,700 millions towards the Bank.' This per the petitioner is not in accordance with the provisions of the Circular. Hence, the Petition with the prayer that the matter be referred back for the State Bank of Pakistan for decision afresh regarding the settlement amount in accordance with the Circular.
2. Learned counsel for the petitioner has submitted that according to the Circular, the petitioner's case would fall into Category "C", as admittedly its outstanding dues towards the Bank are more than Rs.2.5 million. In this event, as the Forced Sale Value (FSV) of the petitioner's assets held as security by the Bank is definitely less than this amount hence according to the criteria given under Category "C" the settlement amount should be equal to such values. However, per the impugned order, it has perhaps been assumed that the FSV of such assets is more than the outstanding amount, hence it has been directed that 75% of the outstanding amount should be recovered. Per learned counsel nothing has been stated in the impugned order as to how the FSV was determined and so also there is nothing in the comments filed by the State Bank of Pakistan in this regard except a simple statement that the FSV of such assets as determined by the Committee was higher than the outstanding liabilities of the petitioner. Learned counsel has further submitted that perhaps the Committee relied upon Format "A" submitted by the Respondent-Bank wherein the FSV of the assets has been stated to be Rs.403,18Q,000 and hence more than its outstanding liabilities of Rs.307,007,000 and consequently it was directed that 75% of the latter amount be paid by the Petitioner. Per learned counsel in fact the FSV of the petitioner's assets mortgaged to the Bank is not more than Rs.800,000. Learned Counsel has finally submitted that the Bank's surveyor's report did not exist till at least 3-2-2006 when the Bank itself had filed an application in Suit No.120 of 1999 between the parties for appointment of such surveyor. Consequently; how could the survey report be dated 8-2-2003, which had been filed before the Committee.
3. In the circumstances, learned counsel has prayed that the matter be sent to the State Bank of Pakistan for the purpose of fresh decision after giving the petitioner a chance to rebut the valuation placed by the respondent-Bank upon its assets. In support of his submissions learned counsel has relied upon the order passed in C.P Nos-666/2004 and 667/2004 wherein the matter was referred back to the State Bank of Pakistan in similar circumstances for decision afresh.
4. On the other hand, Mr. Iqbal Haider, appearing for the respondent-Bank, has submitted firstly that the petitioner's assets were surveyed in the year 2002 as per the reply filed to the application is Suit No.-120/99. Secondly, per the Circular the FSV of the properties has to be assessed by a licensed surveyor/architect on the approved panel of the Pakistan Bankers' Association and admittedly the Banks surveyor was listed as such. Thirdly, per learned counsel the evaluation report of such surveyor was never objected to by the petitioner before the Committee. In fact the amounts ordered to be paid to Habib Bank Limited and United Bank Limited under the Circular which concession had also been solicited by the petitioner were never objected to though the property was the same. In this regard, Learned Counsel has referred to the report of Messrs Cornelius Lane and Mufti, which is available in the record of the Committee's proceedings Tiled by State Bank of Pakistan. He has further submitted. That per this record, the FSV as assessed by the Bank's surveyors was never challenged by the petitioner. Hence, per learned Counsel, this is a past and closed transaction and cannot be reopened by referring the matter back to State Bank of Pakistan, as the Committee is no more in existence. He has relied upon W.P. No.17804 of 2003 entitled Messrs Ghazi Papers Limited v. IDBP and others (decided by the Learned Lahore High Court).
5. Mr. Ainuddin Khan, appearing for State Bank of Pakistan, has supported the arguments of Mr. Iqbal Haider. He has further submitted that vide BPD Circular No.8, the decision of the Committee is binding on both the parties. In support of his submission, he has relied upon Messrs. CONS (Private)
Limited v. Industrial Development Bank of Pakistan (2007 CLD 295), W.P. No.17804 of 2003 entitled Messrs Ghazi Papers Limited, v. IDBP and others, United Bank Limited v. Messrs. Azmat Textile Mills Limited (2002 CLD 542) and Tanya Knitwear (Pvt.) Limited v. United Bank Limited (2005 CLD 114).
6. We have heard all the learned counsel and our conclusionsare as follows:-
7. It would be seen that the controversy between the parties is the FSV of the petitioner's assets over which the respondent-Bank has a charge and the manner in which the same was decided by the Committee. In order to resolve this controversy, we had directed the State Bank of Pakistan to place before us the entire proceedings of the Committee established under BPD Circular No.29 the objective of which was to write off irrecoverable loans and advances by the Banks and DFIs. A perusal of such Circular would denote that it lays down certain guidelines to be followed by the Banks for such loans, which have been divided into three categories. Category "A" are those loans where the outstanding amount is upto Rs.0.5 million, Category "B" is for cases where outstanding amount is between 0.5 million and Rs.2.5 million and Category "C" are loans were the outstanding amount is over Rs.2.5 million. For Category "A" Loans Para. 9.1 of the guidelines would apply which empowers the Board of Directors of the Bank to write off such loans on a case to case basis without going into litigation. However, internal policy/guidelines spelling out the criteria for writing of these loans are to be formulated by the Banks. For Category "B" and "C" loans, more stringent conditions have been prescribed vis. Where the FSV is more than the outstanding amount than 75% or more of the amount is to be realized and where it is less, then a sum equal to the FSV should be recovered in cash. Additionally for Category "C" loans the market value as well as FSV is to be determined by a surveyor/architect on the approved panel o the Pakistan Banks Association. So also accounts of the borrower are to be audited by external/internal auditors. In case of any dispute between the borrower and the bank the matter would be resolved through the Committee established by the State Bank of Pakistan.
8. Per the record of the Sate Bank of Pakistan produced before us, the petitioner had referred the matter to the Committee for resolution on 12-4-2003, as perhaps it could not be resolved between the parties. In turn, this application along with Format "B" (perhaps developed by the Committee) for settlement of the matter upon receipt by the Committee was sent to the respondent-Bank on 5-5-2003 which was required to submit information in respect of the case as per Format "A". The bank in its reply dated 13-8-2003 stated that in the peculiar facts and circumstances of the case it should be allowed to proceed with the litigation against the petitioner wherein it had all chances of recovering the outstanding amount. Secondly it questioned the eligibility of the company to avail the benefits of the Circular. However, the Committee did not agree to this proposition and required the submission of its report in Format "A" per the minutes of its 73rd meeting dated 16th August, 2004. In such meeting, the Committee also directed that Messrs Cornelius, Lane & Mufti should be appointed to determine the charge of each creditor bank over the assets of petitioner Company as well as the share of each in the settlement amount. The Committee again met on 26th November,2004 and again directed the respondent-Bank to submit its report in Format "A" as per the Minutes of its 95th Meeting. As per the minutes of the Committee's 97th Meeting held on 29th December, 2004 it was decided that since the FSV of the securities held by the respondent-Bank was higher than its outstanding liabilities therefore, it should settle the same at 75% of such outstanding liability viz. In the sum of Rs.2,30,775 million. This decision was conveyed to the petitioner vide letter dated 18th January, 2005 by the Committee.
9. In these circumstances, we are of the opinion that the petitioner-company had no opportunity whatsoever of a fair hearing before the Committee wherein it could air its views regarding the FSV of its assets as reported by the respondent-Bank. In this regard, it would be seen that Format "A' sent to the Committee in which such FSV is mentioned, is undated and not even the name of the person who has signed the same is mentioned and neither each page has been initialed by the signatory as per normal practices. So also no letter is available from the respondent-Bank under cover of which Format "A" was sent to the Committee. Consequently, it cannot be ascertained as to on which date Format "A" was received by the Committee. So also the report of the surveyor who has certified the FSV of the Company's assets is also not available on the record of the Committee.
In these circumstances a doubt has arisen as to the manner in which Format "A" was sent to the Committee. So also it appears that the evaluation was done on 8-1-2003 whereas B the Committee was considering it in December, 2005. For all the foregoing reasons, we are of the opinion that the Committee decided the matter in a slipshod manner without any application of mind. It is settled law that all official functionaries are to perform their duties within the ambit of law, efficaciously and judiciously and where they act without jurisdiction, with mala fides or in violation of any law, their actions are certainly amenable to the writ jurisdiction of this Court. This principle of law is so well-known that it does not need any help or support from any other source. Secondly, it is equally well-settled that before passing any orders, the Executive Authorities should give a right of hearing to the parties which right is to be read in all statutory provisions as well as rules/notifications issued thereunder regardless of the fact that it may not be mentioned therein. The deliberations the Committee certainly have the force of law as the Circular has been issued under section 33-B of the Banking Companies Ordinance, 1962 and hence it is bound by the criteria aforementioned as to the treatment of the parties who appear before it. In this regard reference may be made to United Bank Limited v. Messrs. Azmat Textile Mills Limited (supra). We are also not impressed by the argument of learned Counsel appearing for the State Bank of Pakistan and the respondent-Bank that as the Committee is no more in existence and the matter cannot be referred to the State Bank of Pakistan for resolution afresh. It would be seen that certain vested right had accrued to the petitioner company in view of the Circular and where the same were not judiciously dealt with then said company cannot be deprived of the same. With respect we are unable to concur with the opinion of a learned Single Judge of the Lahore High Court to the contrary as expressed in Messrs CONS. (Private) Limited v. Industrial Development Bank of Pakistan (supra). In this regard, it may further be seen that the Hon'ble Supreme Court has time and again held that vested rights cannot .Be taken away save by express words or necessary intendment in the statute and additionally that D where this is not done the statute must not be presumed to operate retrospectively. (See Al-Samrez v Federation of Pakistan (1986 SCM R 1917), Molasses Trading &. Export' (Pvt.) Limited v Federation of Pakistan (1993 SCM R 1905, Crescent Pak Industries (Pvt. Limited v Government of Pakistan (1990 PTD 29) and Ahmed Investment (Pvt.) Limited v Federation of Pakistan (1994 PTD 575). Regarding Mr. Iqbal Haider's contention that the same Company had evaluated the petitioner's assets as in the case of UBL and other Banks which had been accepted by the petitioner, suffice it to say, . That factually this submission is incorrect as both in the cases of UBL and HBL the surveyors were Messrs Engineering and Managing Consultants, whereas in the case of the respondent-Bank they were Messrs SAS International Corporation. Furthermore, it would be seen that Format "A" was supplied by both these banks i.e. UBL and HBL in January, 2004. These formats are in proper form, have been signed and stamped by the Signatory and each page has been initialed and are accompanied by a cover letter in which circumstances we are of the opinion that the petitioner had sufficient time within which to consider the FSV of its assets held as security by these banks. Consequently, where the petitioner chose to accept the FSV in these cases, no exception can be taken to the same.
10. For all the forgoing reasons, we would direct that the matter be remanded back to the State Bank of Pakistan for decision afresh under BPD Circular No.29 after giving an opportunity of a fair hearing to the Petitioner Company. This course of action finds support in the order of the Divisional Bench of this Court dated 1-6-2005 recorded in C.Ps. Nos. 667/2004 and 666/2004 wherein the matters were similarly remanded to the State Bank of Pakistan for resolution under BPD Circular No.29. The Petition stands disposed of in the foregoing terms along with all pending applications.