1. ' ARSHAD NOOR KHAN, J.--- By this appeal under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, the appellant has challenged the order dated 9-8-2005 passed by the learned Single Judge of this Court in Execution No.55 of 1977 so also in similar other Execution Nos.
2. 50/85, 20/91, 86/87, 65/86, 45/85 and 93 of 1991 whereby the preference has been given to the recovery of the dues outstanding against the mortgaged property in favour of respondent No.8.
3. ' The facts leading rise to the present appeal in brief are that initially the State Life Insurance Corporation of Pakistan filed a Suit bearing No.111 of 1972 for recovery of certain dues outstanding against the defendant Hassan Mumtaz which was decreed vide judgment and decree dated 24-2- 1975 passed by the learned Single Judge of this Court. It is further gleaned out from the record that the Property bearing No.23 situated at Moulvi Tamizuddin Road, Karachi had been mortgaged by Hassan Mumtaz, judgment-debtor with the State Life Insurance Corporation as well as with the appellant and with some other mortgages. After passing the decree in favour of State Life Insurance Corporation, the decree-holder filed Execution No.55 of 1977 and during the pendency of the execution application some settlement arrived at in between the decree-holder and judgment-debtor outside the court and by virtue of the said settlement, the decree-holder interest in the execution application waived but meanwhile the Allied Bank of Pakistan, KPT, United Bank Limited of Pakistan, Employees Union of National Tyre and Rubber Company and Mrs. Mirret Zaki, one of the legal heirs of the judgment-debtor, who by that time had expired, filed application in the aforesaid execution applications thereby claiming the proceeds of the mortgaged property to satisfy the money decree passed in their favour.
4. ' The property in dispute was therefore auctioned as per orders of Single Judge through Nazir of this Court. On the fall of the hammer, the maximum bid received was to the tune of Rs.12,152,000 and the said bid was approved vide order of the learned Single Judge on 16-8-1992 and was subsequently confirmed on 17-9-1992 in favour of the auction purchaser namely: Trade Sea (Pvt.)
5. Ltd. Nominee of Rotocast Engineering Company for a total sale consideration of Rs.12,152,000 and the said proceeds of the auction were deposited with the Nazir of this Court. Since there were many creditors claiming the sale proceeds as such vide order of the learned Single Judge dated 15-5- 2001, Nazir was directed to investigate the claim of the interested parties and vide report dated 22- 9-2001 the Nazir after scrutiny of the cases of the said claimants reported the claims of the respective claimants, as under:--
(1) Allied Bank of Pakistan holds a money degree dated 12-3-1985, in Suit No.58/82, in the sum of Rs.3,812,515 Exh.No.50/85 is pending.
(2) Karachi Port Trust holds a money decree (in Suit No.228/83) in the sum of Rs.15,533,200 being rent from January 1978 to December, 2000 Rs.4,238,626 and interest on the said amount Rs.1,314,336 apart from this, the Karachi Port Trust also claims Rs.110,000 as Chowkidar charges and; Rs.879,238 claimed as cost of proceeding as per lease agreement, Execution No.45/85 is pending.
(3) Messrs United Bank Limited holds a mortgage Decree dated 17-11-1989 in Suit No.352/98 in the sum of Rs.38,444,445 in respect of Plot No.23 Moulvi Tamizuddin Road, Karachi-Execution No.20/91 is pending.
(4) Apart from above mortgage decree, HBL also holds a money decree dated 5-7-1988 for Rs.2,453,411 in Suit No.874 of 1980.
(5) Employees' Union of Messrs National Tyre and Rubber Company has also filed a claim in respect of salary of workers for a sum of Rs.7,292,452 they do not hold any decree or adjudication of their claim by any competent court of law.
(6) Mrs. Mirret Zaki one of the legal heir of the judgment-debtor, claims the residue.
6. ' After receipt of the report from the Nazir, the learned Single Judge after hearing the learned counsel for the parties gave preference to the dues in favour of the respondent No.8 and further ordered that after satisfaction of the decree passed in favour of the KPT, the balance, if any, to be proportioned prorate amongst the holders of the money decree in Suit No.874 of 2008 in favour of UBL and then in favour of ABL, decree passed in Suit No.58 of 1982 and still if any proceed remained, it may be disbursed amongst the unsecured creditors i.e. Employees/workers and leftover, if any to the judgment-debtor, all the execution applications referred to above were therefore disposed of accordingly.
7. ' The appellant being highly aggrieved and dissatisfied with the order passed by the learned Single Judge has preferred the present appeal.
8. ' We have heard Mr. Aziz-ur-kehman, Advocate for the appellant and Mr. Arif Khan, Advocate for respondent No.8 and the remaining respondents remained absent.
9. ' Mr. Aziz-ur-Rehman, learned counsel for the appellant vehemently contended that the learned Single Judge committed patent illegality in not considering the scope of Order XXXIV, Rule 13, C.P.C., which is applicable under the peculiar circumstances of the present case and has wrongly placed reliance on section 73, C.P.C. Which is inapplicable. According to him the decree passed in favour of the appellant by a competent court must be given preference because the property in question was mortgaged with the appellant as such appellant has preferential right for satisfaction of the decree in his favour and the learned Single Judge did not consider the matter in true perspective of Order XXXIV, Rule 13, C,P.C. In support of his contention, he has relied upon the case of Messrs Industrial Development Bank of Pakistan v. Maida (Pvt.) Limited reported in 1994 SCM R 2248; the case of Oudh Commercial Bank Ltd. v. Secretary of State, reported in AIR 1935 Lah:319(2); the case of Messrs United Bank Limited v. Muhammad Majeed alias Abdul Majeed; reported in 1991 CLC 1102; the case of Mst. Shanti v. Karachi Transport Corporation and others reported in 2000 CLC 595; and the case of Mst. Sooban Bibi v. Mst. Khatoon and others reported in PLD 2001 Lah.
10. 245.
11. ' Mr. Arif Khan, Advocate for the respondent No.8 while refuting arguments advanced on behalf of the appellant, has vehemently contended that section 73 C.P.C. Fully applies under the circumstances of the present case and that KPT who under statutory laws has a preferential right as Government dues were outstanding against the judgment-debtor and decree was passed in favour of respondent No.8 and by virtue of section 46 of KPT Act the money decree in favour of the Government must be given preference against the mortgaged property. He further contended that respondent No.8 had filed application to implead him as a party in the proceedings before the learned Single Judge, and was allowed to implead him as a party in the execution application which was in compliance of Rule 337 of Sindh Chief Court Rules and that the appellant never applied to be impleaded as a party in the execution application, therefore on this score also the claim of the respondent No.8 has been given preference by the learned Single Judge and the claim of the appellant having no statutory protection or secured guarantee under the statute in comparison to the right of the respondent No.8 guaranteed under section 46 of the KPT Act, therefore, the claim of the respondent No.8 was rightly given preference by the learned Single Judge and the order passed by the learned Single Judge does not suffer from any illegality or irregularity and the appeal merits no consideration and is liable to be dismissed. In support of his contention he has also relied upon the case of Messrs Industrial Development Bank of Pakistan 1994 SCM R 2248.
12. ' We have considered the arguments advanced on behalf of the parties and have gone through the entire record available before us as well as relevant law on the subject.
13. ' It has been borne out from the record that the property in dispute was mortgaged by the deceased Hussain Mumtaz with different banks and Insurance companies and on the basis of such mortgage deed the State Life Insurance Corporation filed Suit No.111 of 1972 which culminated in their favour vide judgment and decree dated 24-2-1975. The said decree-holder filed Execution Application No.55 of 1977. Also the respondent No.8 filed Suit No.118 of 1983 for recovery of an amount of Rs.15,533,200 being rent from January, 1978 to December, 2000 and Rs.4,238,626 and interest in the sum of Rs.11,314,336 so also charges of the Chowkidar in the sum of Rs.110,000 which was also decreed in their favour. The appellant had also filed Suit No.352 of 1998 and had the mortgaged decree dated 17-11-1989 in their favour amounting to Rs.38,444,445 in respect of the same property and filed Execution Application No.20 of 1991. United Bank Limited also obtained a decree dated 5-7-1988 in Suit No.874 of 1980 in the sum of Rs.2,453,411. It is therefore evident that the money decrees were passed in favour of the appellant, respondent No.8 and in favour of other creditors and since the claim of both the parties depends upon the mortgaged decree therefore to resolve the controversy in between the parties., it will be appropriate to examine the provisions of section 73, C.P.C. As well as the provisions of. Order XXXIV, Rule 13, C.P.C. Which reproduced herein below for the sake of convenience:-- ' Section 73, C.P.C.--Proceeds of execution-sale to be rateably distributed among decree-holders:- -
(1) Where assets are held by a Court and more persons than one have, before the receipt of such assets, made application to the Court for the execution of decrees for the payment of money passed against the same judgment-debtor and have not obtained satisfaction thereof, the assets, after deducting the costs of realization, shall be rateably distributed among all such persons: ' Provided as follows:--
(a) where any property is sold subject to a mortgage or charge, the mortgagee or incumbrancer shall not be entitled to share in any surplus arising from such sale;
(b) where any property liable to be sold in execution of a decree is subject to a mortgage or charge, the court may, with the consent of the mortgagee or in cumbrancer, order that the property be sold free from the mortgage or charge, giving to the mortgagee or incumbrancer the same interest in the proceeds of the sale as he had in the property sold;
(c) where any immovable property. Is sold in execution. Of a decree ordering its sale for the discharge of an encumbrance thereon, the proceeds of sale shall be applied first, in defraying the expenses of the sale; secondly, in discharging the amount due under the decree; thirdly, in discharging the interest and principal monies due on subsequent encumbrances (if any); and fourthly, ratably among the holders of decrees for the payment of money against the judgment debtor, who have prior to the sale of the property, applied to the Court which passed the decree ordering such sale for execution of such decrees, and have not obtained satisfaction thereof.
(2) Where all or any of the assets liable to be rateably distributed under this section are paid to a person not entitled to receive the same, any person so entitled may sue such person to compel him to refund the assets.
(3) Nothing in this section affects any right of Government. Order XXXIV, Rule 13:-- Application of proceeds:--
(1) Such proceeds shall be brought into court and applied as follows:-- first, in payment of all expenses incident to the sale or properly incurred in any attempted sale; secondly, in payment of whatever is due to the prior mortgagee on account of the prior mortgage, and costs properly incurred in connection therewith; thirdly, in payment of all interest due on account of the mortgage in consequence whereof the sale was directed and of the costs of the suit in which the decree directing the sale was made; ' fourthly, in payment of the principal money due on account of that mortgage; and lastly, the residue (if any) shall be paid to the person proving himself to be interested in the property sold, or if there are more such persons than one, then to such persons according to their respective interests therein or upon their joint receipt.
(2) Nothing in this rule or in rule 12 shall be deemed to affect the powers conferred by section 57 of the Transfer of Property Act, 1882.
14. ' The glance over the aforesaid provisions shows that there is vast difference in between both these provision as by virtue of section 73, C.P.C. It is condition precedent that there must be more than one creditors who are required to file application in writing before the Court for execution of decree for payment of money awarded against the judgment-debtor and in view of fourth condition to clause (c) to section 73, C.P.C. The Court shall have to distribute ratably amongst the decree- holders who, prior to sale of the property, have applied to the Court who passed the decree, for its satisfaction whereas Rule 13, of Order XXXIV, C.P.C. Does not speak about the proposition when there are more than one decree-holder, how the mortgage decree is to be executed. Thus the provision of section 73, C.P.C. Provides complete code and method for satisfaction of money decree obtained by the different decree-holders to get it satisfied from the mortgage decree passed against the judgment-debtor, in other suit after compliance of conditions enumerated in section 73, C.P.C. In the present case admittedly there are more than one decree-holders who possess money decree in their favour passed in different suits by different Courts and the learned single Judge keeping in view the applicability of section 73, C.P.C. Proceeded to determine the preferential right of the decree-holder amongst several decree-holders and after pondering the relevant law in favour of the various decree-holders opined that in view of section 46 of KPT Act, the KPT has a preferential right to get the decree in his favour satisfied being Government dues. Both the learned counsel for the parties have heavily relied upon the case of Messrs. IDBP, supra, wherein the IDBP had obtained decree and in pursuance of the decree, the mill which was the subject matter of the said suit, was auctioned and while the proceeds of the said auction were still not distributed, the Excise and Taxation Officer, KDA, Karachi Water and Sewerage Board and KESC made claims of their outstanding dues against the said mill and the claims of these departments were accepted. Being aggrieved against such order IDBP approached to the Apex Court who after examination of section 16 of Sindh Immovable Properties Tax Amendment Act (Sindh Act VII of 1997) was of the opinion that the dues of Excise and Taxation Department were the charge over the property in question and being Government dues must be given preference whereas KDA, KW and SB and KESC could not claim priority over that payment and they could seek relief from the residue left after satisfying the decree. The observation made by the Honourable Supreme Court in the case of Messrs Industrial Development Bank of Pakistan, supra, is usefully quoted herein below for the sake of convenience:-- "This rule provides a procedure for an encumbrancer not a party to the suit for the protection of his right and claim. An encumbrancer is entitled to apply to be joined as party to the sale, who can be made party in the proceedings and protect his claim. At that stage the claimant can press his claim and also claim priority, if any. None of these claimants have taken this step nor joined the proceedings of the sale therefore this opportunity which was available to them was lost."
15. ' From the touchstone of the case of IDBP, supra, we have to examine the claim of respondent No.8.
16. The learned counsel for respondent No.8 pointed out that KPT was impleaded as a party in the execution proceedings which fact has not been controverted by the appellant and has further pointed out that the arrear of rent being Government dues have been protected in view of section 46 of KPT Act, 1986. Section 46 of the KPT Act, 1886 provides that for all the amount of tolls, dues, rates and charges leviable under this Act in respect of any goods, the Board shall have a lien on such goods, and shall be entitled to seize and detain the same until such tools, dues, rates and charges are fully paid and for the amount of rent lawfully due on buildings, plinths, stacking areas and other premises, the property of the Board, and not paid after bills therefore have been duly preferred, the Board shall have all lien on all goods, therein or thereon, and shall be entitled to seize and detain the same, and that the lien for such tolls, dues, rates and charges shall have priority over all other liens and claims, except a lien for freight, primage and general average, where such lien has been preserved. Section 46 of KPT Act, 1886 therefore fully protects the right of the KPT including the right of recovery of the land and the outstanding dues of the rent including other claims have been protected by way of statute and creates charge over all the goods or the properties. Admittedly the money decree is operating in favour of the KPT, which being Government dues have created lien and charge over the mortgage decree involved in the present suit, in view of section 46 ibid, and KPT has been joined as party in execution proceedings. In view of requirement of section 73, C.P.C. As such in view of the dictum laid down by the Honourable Supreme Court in the case of IDBP, the learned Single Judge has rightly given preference to the claim of the respondent No.8 for the reasons that the appellants have not pointed out any statutory protection in their favour.
17. ' It is also an admitted position that the respondent No.8 was impleaded as a party on his written application in view of Rule 337 of the Sindh Chief Courts Rules which speaks about becoming a party in the execution application and admittedly the appellant was never impleaded as party in compliance of the Rule 337, ibid as such the appellant have no preferential right against the right of the respondent No.8 and the learned Single Judge rightly observed that the claim of the respondent No.8 has statutory protection in view of section 46 of KPT Act. The case of IDBP, supra, relied upon by the learned counsel for the appellant is therefore not supporting their case, but supporting the case of respondent No.8.
18. ' In the case of Oudh Commercial Bank Limited, supra, it was observed by the learned Lahore High Court that the Executing Court cannot entertain claim on behalf of the Government in absence of decree in its favour and section 73(3), C.P.C. Does not confer any jurisdiction on the Executing Court to entertain the claim on behalf of the Government in the absence of any decree in support of it and that subsection (3) only saves the rights of the Government, independent of the section, such as they might be, and merely appears to have reference to the right of the priority which can be ordinarily claimed in respect of debts due to the Crown. Hence where the Government has not obtained any decree in respect of the premium and arrears of rent claimed by it, Executing Court has no jurisdiction to go into the merits of that claim, but the dictum enunciated in the case of Oudh Commercial Bank, supra, is not applicable under the circumstances of the present case, for the reasons that the money decree passed in Suit No.228 of 1983 is operating in their favour being the arrears of rent therefore the case of Oudh Commercial Bank is not applicable to the case of the appellant.
19. ' In the case of United Bank Limited, supra, the learned Division Bench of this Court was pleased to observe that the transaction of the mortgage by the respondent and appellant is not void on account of the condition mentioned in clause 17. Under clause 18 of the lease deed, KPT has a right to enter in the property in certain situations but such right of re-entry does not invalidate the mortgage in question, but the facts involved in the present suit are entirely different from the facts of UBL case, because in that case it was condition precedent of the lease deed that the property could not be mortgaged by the lessee in presence of the condition that the property could not be leased out without prior permission of the KPT and their Lordship were pleased to observe that in spite of the said condition mentioned in the lease deed, the lessee can mortgage the property and the right of KPT in re-entering the said property does not extinguish.. The case of UBL, supra, is also not applicable to the circumstances of the present case.
20. ' In the case of Mst. Shanti, supra, learned Single Judge of this Court was pleased to observe that the preference to the Government liability over the claim of secured creditors could not be given but in that case, neither the decree was operating in favour of the Government nor the right of the Government were protected by any statute, therefore the learned Single Judge was pleased to observe that the preference to the Government liabilities over the secured creditors could not be given but the facts involved in the present case are entirely different to the facts involved in the case of Mst. Shanti.
21. ' The case of Sooban Bibi, supra, is also not applicable for the reason that in that case it has been observed that no estoppel operates against the law, which is not relevant to the circumstances of the present case.
22. ' After examination of the relevant law as well as case-law on the subject, we are of the considered opinion that the right of the respondent No.8 being statutory has been safeguarded and protected by virtue of section 46 of KPT Act and the decree is also operating in their favour and also they have been impleaded as party in the execution proceedings, whereas no such statutory protection has been enlightened by the learned counsel for the appellant nor they were impleaded as party in view of Rule 337 of Sindh Chief Court Rules and section 73, C.P.C., as such, the learned Single Judge has rightly given preference to the claim of respondent No.8 and we do not find any illegality or irregularity in the order impugned herein. The appeal has, therefore, no merits and the same is hereby dismissed, in limine along with listed application, with no order as to cost.