Instant Constitutional petition assailed the Award/judgments/ orders dated 4.5.1991, 12.3.1992, 3.9.1992 and 29.7.1996, passed by Respondents No, 10, 11 and 13, respectively, to be declared illegal, void and of no legal consequence, whereby under the Cooperative Societies Act, an award in favour of Respondent No, 9 was announced; petitioner-bank was declined to be impleaded as party; revision petition was disposed of and petitioner's objection petition was dismissed by the Chairman Banking Tribunal No, III Lahore.
2. Succinctly, relevant facts are that Kalco Pharma Limited (Respondent No, 1) was granted finance facility by the petitioner-bank in the year 1984 against a registered mortgage deed dated 16.3.1986 of the property situated at 18-Kilometer, Ferozepure Road near Chungi Amer Sidhu, Lahore, measuring 9 Kanals 10 Marlas alongwith Building/Walls, Shed,' Structure, Fittings and Fixtures/Appliances/ appurtenances affixed, etc. This property was further mortgaged vide registered mortgage deed dated 18.5.1987 and equitably with the petitioner-bank by executing memorandum and deposit of title/ documents. The so created charges were committed and registered with the Registrar Joint Stock Company, Lahore. The liabilities towards the petitioner- bank were not liquidated, as per contractual obligations, leading to institution of suit for recovery before the Banking Tribunal. The suit was ultimately decreed on 30.11.1995.
3. Respondent-Company had also availed finance facility from the Mercantile Co-operative Finance Corporation Limited (Respondent No, 9) since June 1982, against the mortgage of land measuring 1-Kanal 18 Marlas owned by Respondent No, 2, the Chief Executive of the respondent- company and House No, 401/C/III, Allama Iqbal Town, Lahore, owned by. Respondent No,
4. Some where in 1989 the Chief Executive of the respondent-company created a further mortgage of his property situated at 18 k.m. Ferozepure Road, Lahore which was already under mortgage with the petitioner bank. This availed loan was also not repaid where upon Mercantile Co-operative Finance Corporation Limited (Respondent No, 9) initiated proceedings before the Registrar, Cooperative Societies for recovery of its dues. The Registrar, Cooperatives Societies, announced award an Award on 11.8.1990 in favour of Mercantile Cooperative Finance Corporation. On an appeal, the Central Registrar, Islamabad set aside the. Award through his order dated 1.12.1990 with a direction to the Registrar, to re-constitute the proceedings by impleading the respondent-company. Fresh Award was passed on 4.5.1991 on the same terms and all the three properties mentioned in the aforementioned were attached. This Award has been challenged by the petitioner in this Constitutional petition.
4. Petitioner moved an application under Order-I Rule 10 CPC praying impleadment to the appeal.
The impleadment was declined and appeal was disposed of on 12.3.1992. Petitioner has also attacked this order in this petition.
5. Petitioner-Bank and Respondents No, 3, 7 .& 8 were said to have filed their distinct revision petitions against appellant order before the Secretary, Cooperative, Government of the Punjab.
Pending these revision petitions, Punjab Undesirable Cooperative Societies (Dissolution) Ordinance, 1992 was promulgated and the Cooperative Societies were took over by the Government of Pakistan. On 3.9.1992 Secretary Cooperative, disposed of the revision petitions with the observations that in view of promulgation of the said Ordinance, he has seized to exercise his jurisdiction.
6. Petitioner-bank, on the other side, went in execution of the decree-dated 30.11.1995 in its favour and detailed the property measuring 9 Kana ls 10 Marlas situated at 18 k.m. Ferozepure Road Lahore in its "Ford Taliqa", for sale through auction. S.M. Yousaf (Respondent No, 15) Auction Purchase of this property, in auction held by the Cooperative Board as Liquidator, filed an objection petition with the claim that he is bona fide purchaser of the property in an open auction which was lawfully commenced and a sale Certificate No, E.22125 AR.FCL dated 4.5.1995 has already been issued in his favour and thus asserted that his property was not liable to be proceeded against; in execution of the decree in favour of the writ petitioner. The Banking Court concerned through impugned order dated 29.7.1996, accepted the objection petition and excluded the above-referred property from auction. The petitioner being aggrieved of all the above noted orders, filed this Constitutional petition with the relief detailed above. Respondents in response to notice by this Court appeared and were represented through their respective counsel.
7. The learned counsel for the petitioner submitted that the petitioner-bank had first mortgage charge through registered deed over the property in question, with whom the documents of title were deposited by the owners/judgment debtors, hence this property could not be re-mortgaged without NOC by the First Charge Holder. According to him, there was no warrantee of title and the auction purchaser got the property subject to already existing restrictions, binding on the judgment debtors and it went with all encumbrances existing over the property at the time of its auction. It as further submitted that mortgage once having been created would terminate either by operation of law or by consent of parties by removing the encumbrances. It was also emphasized that termination of old mortgage had to be established. Similarly waiver/renouncement had to be intentional/deliberate especially when the original mortgage went on, being renewed by the mortgagor, will have priority over any puisine.
8. Intermediate mortgage was urged to be part of the first mortgage as enacted by Section 24 of the Transfer of Property Act. Referring to Section 24 of the Cooperative Societies Act 1925, it was submitted that only a statutory charge in favour of the society was created, leaving the right to redeem with the mortgagor. It was also attempted to be argued that charge on some property differed from a mortgage, not only in form but also in substance which according to him, could not have even been created without notice to the mortgagee-bank.
9. Learned counsel for the respondents especially for Respondents No, 14 & 15 refuted the arguments of the petitioner and supporting the impugned order of the Banking Court, urged that the Constitutional petition is not only bad on account of lathes but the same is also not maintainable, as the order of the executing Court was open to challenge in appeal which was never filed by the bank. It was further contended that all the impugned orders including the award passed by the official working under hierarchy created by the Cooperative Societies Act 1925 were in the knowledge of the Bank and were deliberately not challenged in due course thus those have attained finality and cannot be adjudged in writ jurisdiction. Invocation of jurisdiction under Article 199 of the Constitution claimed to have been ousted in view of provisions of Sections 14 and 16 of the Punjab Undesirable Cooperative Societies (Dissolution) Ordinance, 1992. Estoppel by conduct against the petitioner-bank was assertively applied with the arguments that the petitioner moved some application before Liquidation Board but willfully abandoned/deserted this remedy and intentionally did not approach the Hon'ble Cooperative Judge, in view of which, petitioner was not entitled to challenge those orders thus passed, through collateral proceedings. It was also submitted that petitioner-bank had abandoned its right of the alleged first preferential claim regarding recovery of its loan from the property lawfully auctioned by the Cooperative Board.
According to him, the asserted preferential claim of the bank was taken note in the order-dated 12.3.1992 but this part of the order has not even been challenged/assailed in this writ petition: Respondents attributed malice to the Bank as according to them Bank concealed claim of the Society/Board determined vide order dated 4.5.1991 which had matured into the order dated 3.9.1992, and was not brought to light through its suit filed on 2.1.1995 and according to them, obviously for the reason that it was not interested in recovery of decretal amount for the property already sold through public auction under a valid order of the Cooperative Board. Section 9 read with Section 11 of the Banking Tribunal Ordinance, 1984 was relied to urge that impugned order by the Ranking Court was appeal able and there against, writ petition is not maintainable.
10.I have heard the learned counsel for the parties and have examined the record, appended herewith. Undisputedly, property of Respondents No, 1 and 2 measuring 9 Kanals 10 Marlas situated at 18 k.m. Ferozepure Road Lahore was initially mortgaged through a registered deed dated 16.3.1986 in favour of the petitioner-bank and this property under went further mortgage on 16.5.1986, besides four equitable mortgages by deposit of title deeds. The mortgage so created was never terminated by operation of law or through deliberate act of the parties. The termination if any had to be proved/established but there was no evidence with the Banking Court to return any such finding. Apex Court of this country had mandated in the case of Nazeef vs. Abdul Ghaffar and others (PLD 1966 SC 267) that when a person is possessed of any right, question of its waiver/re- announcement had to be proved by evidence and while electing any of two interpretations one involving loss of that right and the other preserving the right, his conduct was to be construed on the basis, preserving has. right. Relinquishment/desertion of mortgagee rights inspite of holding title documents of the property under mortgage and institution of suit for recovery of the advanced finance facility, even though in 1995 would not lead to loss of mortgagee rights. The petitioner-bank had not issued any NOC in favour of Respondents No, 1 and 2 for creation of second mortgage and the petitioner being not party to this transaction, will not be bound by it. Second mortgage in favour of Respondent No, 9 could have been created by the owners, till the time their title in the property became extinct. Now keeping in view both these mortgages, Section 79 of the Transfer of Property Act, 1882 enacted an execution to the rule of priority, making the puisine (subsequent/intermediate) mortgage as part of the first mortgage, if the advanced amount was within the fixed minimum limit, provided the puisine mortgagee had the notice of first mortgage.
The subsequent mortgagee i,e, Mercantile Co-operative Finance Corporation Limited had no notice of mortgage of the petitioner and as such it can hardly be held that later mortgage was void or became part of the 1st Mortgage under the ordinary law of the land, as mortgagor/owner could further mortgage/sell out his property but subject to earlier mortgage/charge/encumbrance.
11.Undisputedly, property in question was initially mortgaged with the petitioner-bank and was subsequently attached by the Registrar, Cooperative Societies, through his impugned order dated 4.5.1991 and this order was challenged by the Respondents No, 3, 7 and 8 where petitioner applied for its impleadment but the same was declined through order dated 12.3.1992 dismissing the appeal as well. By this time, suit, by the petitioner-bank was not decided but inspite of it bank did file a revision petition before the Secretary Cooperative, Government of the Punjab, as bank was also a respondent in the revision petition filed by the other parties. Petitioner had also moved an application before the Cooperative Board, constituted under the Punjab Undesirable Cooperative Societies (Dissolution) Act, 1993 but fate of the same is not know even to the bank itself. The property mortgaged with Respondent No, 9 was put to open auction by the Cooperative Board and it is not the case of the bank that the auction was fake. Sale through auction was confirmed and a sale certificate was issued in favour of the contesting respondents, leading to sanctioning of Mutation No, 12904, earlier to the decree dated 30.11.1995 in favour of the bank. In this background, the property purchased by Respondent No, 14 remained under encumbrance in form of mortgage in favour of the petitioner-bank as the same had not been redeemed and the mortgagee rights were not waived/renounced by any intentional/deliberate act of the bank who had been asserting its mortgagee rights before different forums but this aspect of the case was not attended by the executing Court while accepting the objection petition for Respondents No, 14 and 15 and the property under the first charge of the petitioner-bank was excluded from the "Fard Taliqa" through a sketchy order.
12. Adverting to objections of the learned counsel for the respondent to the effect that petitioner- bank had not challenged the Award by the Registrar, Cooperative Societies, attachment of the property under Award was not assailed; case was not followed before the Cooperative Board or the Hon'ble Cooperative Judge was not approached and that an appeal was not filed against the order by the executing Court, petitioner-bank was not party to the proceedings before the Registrar, Cooperative Societies and it had no notice of those proceedings. An application was moved before the Cooperative Board and instead of appealing against the order of the executing Court, instant Constitutional petition was filed but for the reasons already noted in the earlier paragraphs, the order by the executing Court was patently illegal as the entire controversy was not comprehended and such an order cannot be allowed to continue in view of the judgments in the cases of Syed All Abbas and others vs. Vishan Singh and others (PLD 1967 Supreme Court 294)
Nawab Syed Raunaq Ali etc. vs. Chief Settlement Commissioner (PLD 1973 Supreme Court 236)
Khuda Bakhsh vs. Khushi Muhammad and 3 others (PLD 1976 Supreme Court 208) and Ch. Muhammad Amin vs. Mushtaq Ahmad etc. (PLD 1980 Lahore 784). Even otherwise the impugned order was passed by the Executing/Banking Court on 29.7.1996 and instant petition was filed on 15.9.1996 which can be converted/treated as an appeal, as the same would be within the period of limitation, after excluding time consumed in getting certified copies and the Court fee already affixed was excessive than the one required thus I feel no hesitation to intervene.
13. For the reasons noted above, instant petition is bound to succeed and is accordingly allowed.
Impugned, order dated 29.7.1996 passed by the Banking Court is declared to be void and nonexistent in the eye of law with the result that objection petition filed by the Respondents No, 14 and 15 shall be deemed to be pending and shall be decided afresh in accordance with law. There will be no order as to costs.