M/s. Crystal Chemicals Limited etc. (judgment debtors under the compromise decree with IDBP dated 30.03.2004) filed the instant application under Section 47 read with Section 151 CPC in COS No, 66-2000, initially numbered as CM. No, 300-B-2005, subsequently amended to CM No, 420-13- 2005. The relief sought by the judgment debtors herein is for this Court to determine the share of the decree holder bank in the forced sale value of the assets of the judgment debtor's project, assets held jointly under its charge with the ICP and in light thereof, to determine whether the said share of the IDBP is limited to 54.6% already paid by the judgment debtors to the decree holder bank, thereby satisfying the compromise decree in full.
The undisputed facts are briefly recounted as follows:
2. A compromise agreement dated 29.3.2004 was signed between both the parties for a total sum of Rs, 174.040 million to be paid by the judgment debtors in full and final settlement of their total liabilities towards IDBP in terms of the State Bank of Pakistan settlement scheme promulgated through BPD Circular 29 dated 15.10.2002. As per the terms of Paragraph 9 (c) (iii) of the Circular, the total amount due was calculated by IDBP on the basis of forced sale value of the mortgaged properties and project assets under: (1) its exclusive charge and (2) under its joint pari passu charge, shared with Investment Corporation Pakistan (ICP), another creditor of the judgment debtor and a proforma defendant in the suit. The forced sale value of the securities in both the above categories was jointly settled by the parties on the basis of the evaluator's report. The said compromise agreement was given sanction of the Court vide compromise decree dated 30.03.2004.
3. The mortgaged securities under the exclusive charge of IDBP were evaluated at Rs,76 million for the immovable properties and Rs,2.3 million for the pledged goods. As regards the pledged goods, their value was not included in the initial calculations of the total liability by IDBP hence the sum of Rs, 2.3 million was to be paid in addition to Rs, 174.04 million.
4. The forced sale value of the properties (project assets of the judgment debtors) under the joint pari passu charge of IDBP and ICP, was determined at Rs, 114 million. IDBP determined its share of the forced sale value of the jointly held securities as 86%, while it calculated ICP's share to be 14% of the same. The relevant clauses of the compromise decree are reproduced as follows: H. That out of the agreed liability the Bank has determined its share at the rate of 86% of the FSV of the project assets being held under the joint charge of the Bank and ICP. In case where the Bank and ICP were to resolve their shares different to 86:14 any differential will be settled by the Bank without any liability on the Borrowers Customers."
Clause 3. "That the Borrowers Customers shall be entirely responsible for the adjustment/settlement of its any other financial liability towards other Bank/DFI/Creditor."
5. As per the terms of the compromise, decree, the judgment debtors admittedly made payment of Rs,78.3 million, the agreed upon value of the assets held exclusively under IDBP's charge. Upon receipt of the same, IDBP lifted its charge, releasing the mortgaged properties and the pledged goods held by it.
6. Subsequent thereto, a dispute arose between the IDBP and the ICP regarding their respective shares in the project assets held jointly under their pari passu charge. The ICP refuted the IDBP's contention in Clause H of the compromise decree, that its respective share ratio in the jointly held assets was 86%: 14%. According to the ICP, the correct sharing ratio was (IDBP) 54.6%: (ICP) 45.4%.
Furthermore, in order to protect its interests, the ICP rejuvenated winding up proceedings filed by it against the judgment debtors, Crystal Chemicals Limited and filed CM No, 356 L of 2004 before this Honourable Court stating that the compromise decree was not binding upon it. The said application was accepted by this Court, confirming the same, as ICP was neither a party to the compromise agreement nor the decree.
7. As per the above-reproduced terms of the compromise decree (Clause 3), it was agreed between the parties that the judgment debtors were directly responsible for settling other creditors such as the ICP. Therefore the dispute arising between the IDBP and the ICP led the judgment debtors to hold investigations to find out the actual agreed pari passu ratio between IDBP and ICP.
It was imperative for the judgment debtors to hold independent investigations to determine the correct position as the differential in the sharing ratio would affect the liability of the judgment debtors towards other creditors, such as the ICP. Furthermore if the IDBP were to obtain or receive a share in FSV beyond its lawful entitlement as per BPD Circular 29, it would also reduce the financial capacity of the judgment debtors to clear their dues towards other creditors.
8. The judgment debtors commissioned a complete report from the Securities and Exchange Commission of Pakistan, placed on the Court's record, which established that the agreed sharing ratio between IDBP and ICP, as per registered pari passu charge was 54.6% and 45.4%, respectively.
Consequently, a new payment arrangement was worked out between the IDBP and the judgment debtors whereby it was agreed that the judgment debtors would pay the undisputed amount of Rs, 62.244 million representing 54.6% of the forced sale value of the project assets, which was reduced to Rs, 54.779 million after a rebate of Rs, 7.465 million for prompt payment.
9. As a result thereof, an application bearing C.M. No, 231-2004 was filed in COS No, 66-2000, the prayer of which being important, is reproduced below:-- "It is most respectively prayed that the petitioners may be allowed to pay and IDBP be directed to accept a payment of 54.6% of the FSV of the Company's assets under the joint charge of IDBP and ICP subject to a discount of 6% on all the amounts paid to it i,e, on the sum of Rs,58.596 million paid on 29.03.2004 and Rs, 62.244 million to be paid now. In addition, as agreed by IDBP, if any further payment is found due against the petitioners and the same is made within 30 days of its so being found. IDBP will allow the discount of 6% on the such payment if made in lump sum. Further, the petitioners may graciously be allowed to settle independently with the ICP, in accordance with clause 3 of the Consent Decree."
10. This application was filed on 08.07.2004 as an urgent matter. It was listed for and heard on the next day, 09.07.2004. IDBP's learned counsel, Sardar Mashkoor Ahmad, Advocate, appeared without a formal notice at the motion/urgent stage and with his consent duly recorded therein; the following order was passed by this Honourable Court, to dispose of C.M. No, 23143-2004: "The learned counsel for the IDBP has appeared and concurred to the petition in hand. It appears that the ICP also has some claims in the amount payable under the decree dated 30.03.2004. Since the petitioner is paying only 54 percent of the undisputed share to IDBP, this petition is allowed subject to just and legal exceptions. This petition is disposed of.
11. Subsequent thereto, the judgment debtors wrote a letter dated 14.7.2004 to the IDBP, in response to which the IDBP wrote on July 22, 2004, Memo bearing No, LHR/SAM/222 slating that:-- "In compliance of the Court order dated 09.07.2004 the Bank is agreeable to receive its undisputed share of 54.6% in the FSV of the project assets of Rs, 114.000 million worked out by ICP on provisional basis which works out to Rs,62.44 million. Further the amount payable by you after allowing rebate on the payment of Rs, 76.000 million already made by you on 30.03.2004 and proposed to be made (62.244 million) net payable amount works out to Rs, 54,986,824.00 (including per forced charges incurred/to be incurred after 30.09.2002 detailed as under:-- Total value of project assets 114,000,000.00 Total value of collateral 76,000,000.00 IDBP share in project assets (undisputed 54.696)62,244,000.00 Value of collateral (100%) 76,000,000.00 Total 138,244,000.00 10% down payment not eligible for discount13,824,400.00 Amount eligible for discount 124,419,600.00 Discount @ 6% 7,465,176.00 Amount payable net of discount including 10% down payment 130,778,824.00 Less amount already remitted by the Borrowers76,000,000.00 Balance amount payable 54, 778,824.00 Perforce charges incurred to be incurred After 30.09.2002208,000.00 Total payable 54,986,824,00
12. The decree holder, IDBF', thus demanded the payment of the undisputed amount of.
Rs,54,986,824/- from the judgment debtors. The amount was admittedly paid by them and duly received by the IDBP. While accepting payment of the undisputed sum, IDBP sought confirmation that subsequent to resolution of the dispute with the ICP, the judgment debtors would have to make any additional payment in lump sum within 30 days in order to avail 6% rebate on the payment excluding the 10% not eligible for the same. In the event the judgment debtors chose not to pay in lump sum, the IDBP would provide a new schedule of payments to them, on which no rebate would be allowed.
13. The judgment debtors sent the payment of Rs, 54,986,824 under cover of letter dated 23.07.2004, which provided that:-- "The payment now being made will extinguish all liabilities of the company towards IDBP insofar as its undisputed share is concerned. However, if it is found that IDBP is entitled to any additional share i,e, beyond 54.6% we will make that payment when so determined either in lump sum within 30 days of the final determination subject to 6% discount on 90% of the amount or in installments as per worked out schedule."
14. At that point in time, that is, until 23.7.2004, the judgment debtors had admittedly paid a total sum of Rs, 133.079 million to the IDBP with a grant of rebate of 7.485 million for lump sum payment.
Matters were thus left in a state of flux until final resolution of the question of the share ratio between IDBP and ICP. Subsequent exchanges and communications between the IDBP and the judgment debtors led to a deadlock situation, wherein the judgment debtors claimed that they had extinguished their total liability towards IDBP whereas IDBP refuted their contention, demanding further payment in line with whatever share ratio was determined afresh between the IDBP arid ICP, respectively. Unable to resolve matters amicably, the judgment debtors approached the Court on 15.9.2004 and filed the instant application, originally numbered as. C.M. No, 300-B-2004, later amended and renumbered as C.M. No, 420-B-2005. The IDBP and ICP have both participated in the proceedings and replied to the instant application.
15. In the meantime, during continuing correspondence between the parties, IDBP set out its final position regarding the new sharing ratio with ICP and corresponding further liability of the judgment debtors. The letter dated 14.02.2005 read as under: ".....you were allowed to pay undisputed share of IDBP in the FSV of the project assets subject to the condition that after settlement of sharing dispute with ICP you will make payment of the balance amount in lump sum within 30 days on which the Bank will allow 6% rebate and in case you remain unable to pay the balance amount in lump sum the Bank will convey repayment schedule for the same without rebate. In this regard we are pleased to inform that dispute regarding sharing ratio has been resolved with ICP and your liability with IDBP under. SBP Guideline has been re- determined at Rs, 166.167 million instead of Rs, 174.040 million against which you already have paid Rs, 133.079 million net of rebate of Rs, 7.465 million. At present balance liability of Rs,26.073 million plus, perforce/legal charges of Rs, 0.228 million incurred/to be incurred after 30.09.2002 till settlement of loan liability in full is payable.
Since dispute regarding calculation of sharing ratio has been resolved, you are requested to pay Rs,26.301 million within 30 days hereof in terms of our above referred letter dated 22.07.2004.
However, in case you opt to pay this amount in installments, it is submitted that as per compromise, the liability under Circular No, 29 was to be re-paid in 12 quarterly installments w,e,f, 30.06.2004. Since the due date of 3 quarterly installments have passed, therefore, the balance liability of Rs,26.073 million is to be paid in 9 quarterly installments of Rs,2.173 million payable w,e,f, 30.03.2005 and complete the documentation formalities as advised by the Bank's Legal Counsel.
You will also pay Rs, 0.228 million legal charges in cash."
16. The judgment debtors contended that the ratio of the jointly mortgaged property between IDBP and ICP had already been settled at 54.6% and 45.4% respectively, according to which, the agreed liability of the judgment debtors had been fully paid and adjusted. Furthermore, that the IDBP had no right to claim more than its share from the FSV.
17. While the instant application remained pending, the judgment debtors filed another C.M. No, 244-B-2005 on 28.05.2005 seeking that the applicant/judgment debtors be allowed to deposit a Bank Guarantee for the demanded sum of Rs,26.073 million and charge of IDBP on the project assets be ordered to be released on the furnishing of such Bank Guarantee. The application was allowed, while IDBP was directed to release its charge over the project assets. Consequently, a bank guarantee of Rs, 26.073 million was provided by the judgment debtors to the IDBP and accepted by it, while it released its charge over the project assets. The judgment debtors then substituted the bank guarantee with a cash payment. The said sum of Rs,26.073 million was paid subject to the decision of the Court in the instant application CM. No, 420-B-2005.
18. Learned counsel for the applicant/judgment debtors has made the following submissions in support of his application:--
(i) The judgment debtors are entitled to make the instant application, as the "Court executing a decree" includes proceedings initiated by the decree holder and the judgment debtor. He has relied on Erusappa Mudallar v. Commercial and Land Mortgage Bank Limited (1899 Madras Series Volume 23.)
(ii) Under Section 47 CPC, the executing Court has the exclusive jurisdiction to look into the execution, discharge and satisfaction of the decree and settle any questions related thereto.
Section 47 (1) provides that: "All questions arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution, discharge or satisfaction of the decree, shall be determined by the Court executing the decree and not by a separate suit."
He has relied on Wali Muhammad and 3 others v. Muhammad Nawaz Khan and another (PLD 1993 (Peshawar) 197), Riaz Hussain v. Muhammad Akbar (2003 SCMR 181), Haji Abdul Wali Khan and another v. Muhammad Hanif and another (1991 SCMR 2457) and Muhammad Saeed v. Yasin and another (PLD 1996 Karachi 308) to establish that the provisions of Section 47 must be liberally interpreted in order to avoid the necessity of a fresh suit to adjudicate upon questions relating to execution of the decree so as to accord relief finally, cheaply and speedily to the parties.
(iii) In the alternative, he also relied on Toor Gul v. Mst. Mumtaz Begum (PLD 1972 Supreme Court 9), NWFP Government, Peshawar through Collector Abbottabad and another (PLD 1993 Supreme Court 418), Emirates Bank International Limited v. Adamjee Industries Limited Karachi and 14 others (1993 CLC Karachi 489) and Bajrang Rai and others v. Ismail Mian and others (AIR 1978 Patna 339) to argue that the Court has inherent powers under S. 151 CPC to further the ends of justice and where specific provisions do not meet the requirements of the case, the Court may make such orders as are necessary.
(iv) Agreements arrived at between decree holders and judgment debtors, even subsequent to the decree, are binding and can be duly implemented by the Court executing the decree. Learned counsel for the judgment debtors relied on Oudh Commercial Bank Ltd., Fyzabad v. Thakurain Bind Basni Kaur and others (AIR 1939 (Privy Council) 80) and Allah Diwaya and others v. Allah Diwaya and others (1996 CLC 1399).
(v) In the exercise of its jurisdiction under Section 47 CPC, -the Executing Court can take into consideration subsequent events even after passing of the decree. Fakir Abdullah and others v.
Government of Sindh (PLD 2001 Supreme Court 131) was relied on in this regard.
(vi) Interpretation of the decree is amongst the powers of the executing Court. Muhammad Inayat v. Ghulam Murtaza (PLD 1987 Lahore 537) was relied on to establish that in exercise of its power of construction, the executing Court may look at the pleadings, documents, evidence on the record, or even fresh evidence in addition to the decree.
(vii) In case of any doubt, the ambiguity is to be resolved in favour of the judgment debtor.
Gokaran Singh v. Mangli and others (AIR 1921 Oudh 138) was relied on.
19. Learned counsel for the judgment debtors argued that Paragraph 9 (iii) (c) of BPD Circular 29 was the basis of the compromise agreement and decree, therefore the same has to be enforced within its parameters. Paragraph 9 (iii) (c) provides that the amount to be paid to a creditor is to be determined on the basis of the forced sale value of the securities under its charge compared to the disbursed loan amount. If the disbursed loan amount is greater than the forced sale value of the assets under the creditor's charge, then the debtor will pay the forced sale value of its assets in full and final settlement of its liabilities. This was precisely the settlement arrived at between the IDBP and the judgment debtors under the Circular, reflected and recorded in the compromise decree. The maximum liability of the judgment debtors was fixed at Rs, 174.04 million, which comprised the forced sale value of the securities under the exclusive charge of IDBP together with its share in the project assets jointly held with ICP. The forced sale value of the assets exclusively under the IDBP's charge has admittedly been paid to the IDBP. In addition, the sharing ratio confirmed and authenticated by the search report from the Securities and Exchange Commission of Pakistan with respect to the joint pari passu registered charge held by IDBP and ICP over the project assets is 54.6%: 45.4%. This ratio of the first and pari passu charge of 54.6.% and 45.4%, respectively, has neither been denied nor questioned by IDBP. A sum of Rs,54,778,824, equivalent to its share of 54.6%, has also been paid by the judgment debtors to IDBP, with its concurrence before the Court. The amount of Rs, 26.073 million demanded in excess thereof is admittedly being so demanded on the basis of disbursements and not as per registered charge, which determination runs contrary to the Circular and the decree. It is proved by. the search report that the securities under the valid charge of the IDBP are limited to 54.6%, after which IDBP issued an NOC in favour of ICP, which thereafter created a pari passu charge in its favour. No other charge was validly registered in favour of IDBP. Therefore; the IDBP is entitled only to the amount of Rs, 133,078,824 already paid to it, which extinguishes the judgment debtor's total liability towards it under the compromise decree.
20. It was further emphasized that the bonafides of the judgment debtors are evident by their conduct as they have also paid the additional amount of Rs, 26.073 million demanded by the IDBP, albeit subject to the final disposal of the instant application.
21. The learned counsel for the judgment debtors also contended that the decree holder unilaterally modified the compromise decree. It re-determined the liability of the judgment debtors under BPD Circular No, 29 at Rs, 166.617 million in place of the decretal amount of Rs, 174.040 million and on adjusting payments and rebates, it finally claimed the balance at Rs,26.073 million.
Therefore, it is an accepted position that the earlier calculation by IDBP that a share of 86% was due to it in respect of its jointly held assets with ICP was incorrect. The new amount of Rs, 26.073 million, claimed in writing by it (through letter dated 14.2.2005), was described as reflective of the fresh determination of its sharing ratio with ICP, at 77.53% instead of 86%.
22. The learned counsel for the judgment debtors concluded his arguments by submitting that the fundamental provisions of the compromise decree, that is, the total liability, the balance due and IDBP's 86% share in the forced sale value of the jointly held assets with ICP were unilaterally varied by the IDBP, hence ceased to be binding upon the parties in their original content. In light of subsequent events, correspondence between the parties and position taken before the Court in the current proceedings, it was clear that the decree had been varied and was to be construed accordingly. The final understanding between the parties apparent from the record was that the liability of the judgment debtors towards IDBP under the compromise decree was fully and finally settled and all dues cleared with the last payment of Rs, 54,778,824 made to it as per its confirmed share of 54.6% in the forced sale value of the jointly held assets. Therefore, the total payment of Rs, 133,078,824 to the IDBP extinguished all liabilities under the compromise decree and the IDBP was not entitled to the payment of Rs, 26.073 million made in excess thereof, and may be directed to reimburse the same to the judgment debtors.
23. The counsel for the judgment debtors as a parting submission made reference to the provisions of S.33B of the Banking Companies Ordinance 1962. He emphasized that BPD Circular 29 under which the settlement between the decree holder bank and the judgment debtor was arrived at, was for the benefit of the borrowers and the customers of the bank. Meaning thereby, that any benefit that could come in the way of the judgment debtor under the Circular ought to be allowed to them. Interpretation of the provisions, of Para 9. (c) (iii) of the Circular when made keeping in mind the said S. 33B, would establish that the decree holder bank could not demand amounts in excess of its share in the value of the security under its valid charge.
24. The learned counsel for the decree holder bank contended that there was no variation in the compromise decree and/or the sharing ratio between the IDBP and the ICP; the new amount demanded was simply the earlier amount after deduction of rebate at 6% on 90% of the said amount. He elaborated that there had been no re-determination of liability. The amount agreed to be paid between the decree holder, and the judgment debtors was Rs, 174.04 million with a discount of 6% against lump sum cash payment on 90% of this amount. The letter dated 14.02.2005 written by the IDBP to the judgment debtors merely deducted the rebate of Rs, 7.465 million out of the agreed liability of Rs, 174.04 million. Accordingly, the balance payable worked out to be Rs, 166.539 million, which is almost the same as the amount of Rs, 166.617 million conveyed through IDBP's letter dated 14.02.2005.
25. He further submitted that the sharing ratio between the IDBP. and the ICP in respect of the forced sale value of the project assets of the judgment debtors, relates solely to the IDBP and the ICP, the pari passu charge holders and bears no relation to the judgment debtors. Whether IDBP has a share of 86% or less is a matter to be decided between the two charge holders to the exclusion of the judgment debtors. Furthermore, as Rs, 166.617 million, the new sum demanded by the IDBP, remains within the agreed limit of Rs, 174,04 million, IDBP is entitled to receive the same.
26. The learned counsel for the decree holder further contended that the share of IDBP is dependant upon the liability of the judgment debtors based upon disbursements made to them and not upon the registered charge on the assets of the judgment debtor company. Therefore, the instant application is misconceived and merits dismissal.
27. The Court has heard the arguments and examined the record.
28. This petition raises interesting and important issues. These may be summarized as follows:--
(a) The locus standi of the Petitioner to file this application.
(b) Jurisdiction of the Executing Court. a. Effect of the subsequent events understanding/ agreement arrived at between the decree holder and the judgment debtor after the passing of the decree. b. Interpretation of the Decree. c. Entitlement of IDBP Under the Decree Locus Standi of the Petitioner: Section 47 CPC makes no distinction between a decree holder and a judgment debtor when it comes to the invocation of jurisdiction of the executing Court. Generally it is a decree holder who comes to the Court for execution of his decree against a judgment debtor. However, there is no bar against a judgment debtor filing an objection petition and initiating execution proceedings.
Reference in this regard may be made to Riaz Hussain v. Muhammad Akbar (2003 SCMR 181), where it was held that "Object of Legislature is to provide an opportunity to judgment debtor to make an objection petition even if the decree holder withholds the execution petition and gets the decree satisfied through some other mode. A contrary view limits the scope of S.47 CPC and thus militates against the object and intention of the legislature." Restriction on filing an objection petition under S.47 CPC in the absence of an execution application would have placed the judgment debtors in the unenviable position of having no remedy and forum for redressal of their grievance. Similarly in Erusappa Mudallar v. Commercial and Land Mortgage Bank Limited (1899 Madras Series Volume 23), it was held that "Court executing a decree includes proceedings initiated by decree holder and by judgment debtor".
It is thus clear that the petitioner is well within his right in moving the instant application.
Jurisdiction of the Executing Court:-- Under S. 47 CPC, the executing Court has the exclusive jurisdiction to look into the execution, discharge or satisfaction of the decree and settle all question related thereto. S. 47 provides "Questions to be determined by the Court executing decree (i) All questions arising between the parties to the suit in which the decree was passed, or their representatives and relating to the execution, discharge or satisfaction of the decree shall be determined by the Court executing the decree and not by a separate suit." Therefore, the present application, which seeks determination of the fundamental question that whether after a payment of Rs, 140.564 million, made by the judgment debtors to the decree holder bank, inclusive of rebate of Rs, 7.485 million, calculated at the rate of 6% against 90% of the payment made in lump sum, the decree stands satisfied and the liability of the decree holder is fully extinguished, falls within the exclusive jurisdiction of this Court.
The Court, in order to avoid endless litigation between the parties and to provide relief without unnecessary delay and expense would entertain all question requiring determination arising out of the decree. The law is absolutely clear that no technicalities are to stand in the way of meeting the ends of justice. The Court therefore agrees with the submission made by the learned Counsel for the petitioner that under the law this Court is the only forum where all questions raised in the petition which relate to the execution, discharge and satisfaction of the decree may be effectively determined. In Haji Abdul Wali Khan and another v. Muhammad Hanif and another (1991 SCMR, 2457), the august Supreme Court of Pakistan was pleased to hold that "legislature had empowered Courts executing decrees to determine all questions relating to execution, discharge or satisfaction of decree and not by a separate suit." Similarly, in Wali Muhammad and 3 others v. Muhammad Nawaz Khan and another (PLDI 1993 (Peshawar) 197), the honourable Peshawar High Court held that "Provisions of S.47, Civil Procedure Code, 1908, does not bar the remedy but only regulates the forum for enforcement of rights insofar as it channelizes all matters relating to the executing, discharge or satisfaction of the decree to the executing Court and leaves unimpaired the jurisdiction of the Civil Court to entertain suit in relation to matters other than those mentioned in S.47 Civil Procedure Code. Two conditions which are sine qua non for application of Section 47 of the Civil Procedure Code. 1908 are; that the question should have arisen between the parties to the suit in which decree was passed or their representatives and the question should relate to the execution, discharge or satisfaction, of the decree." In Muhammad Saeed v. Yasin and another (PLD 1996 (W.P.) Karachi 308), the honourable Court was pleased to hold that "The object of S.47 of the Civil Procedure Code 1908 is to check and avoid end less litigation and with this view it enables the parties to obtain adjudication of questions relating to execution without unnecessary expense or delay with a fresh trial. It deals with the enforcement of judgments and lays down that questions specified in it shall be tried in execution and not by a separate suit. When its object is to accord relief to the parties finally, cheaply and speedily without the necessity of a fresh suit it must be construed as liberally as the language would reasonably admit of." The view taken by this Court to settle questions raised by the applicant judgment debtors in the application under consideration stands fortified by these judgments which have been rendered by the august Supreme Court of Pakistan, The Peshawar and The Sindh High Court.
Effect of the events, understanding, agreement arrived at between the decree holder and the judgment debtors after the passing of the decree:-- The learned counsel for the applicant judgment debtors submitted that this Court may take into consideration events and agreements and understandings arrived at between the decree holder bank and the applicant judgment debtors after the passing of the compromise decree. The Court needs to consider whether subsequent events, agreements and understandings, if any, arrived at between the parties which result in variation, modification and change in the terms and conditions of a decree can be taken into consideration while executing a decree. On this issue the learned counsel for the judgment debtors referred to Oudh Commercial Bank Ltd. Fyzabad v. Thakurain Bind Basni Kaur and others (MR 1939 (Privy Council) 80), Allah Diwaya and others v. Allah Diwaya and others (1996 CLC 1399), Fakir Abdullah and others v. Government of Sindh (PLD 2001 Supreme Court 131). In Fakir Abdullah's case the august Supreme Court of Pakistan held that "Executing Court in exercise of its jurisdiction Under S. 47 CPC could take into consideration subsequent events even after passing of the decree. Such jurisdiction could be exercised in order to ensure that the process of law might not be abused and the judicial pronouncements should be implemented effectively instead of making them ineffective on account of their inexcusability". In Allah Diwaya and others v.
Allah Diwaya and others supra it was held that All questions between parties relating to execution, discharge, or satisfaction of decree would be determined by executing Court in terms of S. 47 CPC, while adjustment and satisfaction of decree would be possible under Order XXI, Rule 2 CPC. Parties were thus at liberty to adjust their rights and liabilities accrued under decree or decree-holder can discharge judgment debtor of his obligation under decree". In Oudh Commercial Bank Ltd. Fyzabad v. Thakurain Bind Basni Kaur and others "it was laid down that the Code contains no general restriction on the parties' liberty of contract with reference to their rights and obligations under the decree. In the absence of express statutory authority it is not possible to regard, Order XX, R. 10 as excluding any possibility of parties coining to a valid agreement for time to which the Court under S.47 will have regard ....". In the presence of these authorities which clearly lay down that executing Court Under S. 47 CPC can look into events subsequent to the passing of the decree and give effect to agreements arrived at between the decree holder and the judgment debtors, the Court has no doubt that it can look into and implement agreements which have been made by the parties for the satisfaction of the decree subsequent to the passing of the decree.
29. The next important question is; What are the subsequent, events and what agreements, if any, with regard to the satisfaction and discharge of the Compromise Decree dated 30/03/2004 arrived at between the parties. The contention raised by the judgment debtors is that IDBP, the decree holder bank, had by itself determined that it was entitled to 86% of the forced sale value of the assets which were under joint pari passu charge of IDBP and ICP. The total value of these assets was fixed at Rs, 114 million. It is accepted by the judgment debtors as well as the decree holder that ICP was not party to the compromise decree. The factum of its not being party to the compromise decree was agitated before this Court by ICP and was so accepted, whereby the winding up proceedings which had been disposed off were restored. Therefore, when ICP, the other charge holder, challenged IDBP's unilateral determination of its share at 86% of the forced sale value of the assets, IDBP agreed to the re-determination of its share. At this point in time, which was obviously subsequent to the passing of the compromise decree, the judgment debtors had a search conducted with the Securities and Exchange Commission and found that IDBP's validly created charge upon the assets of the judgment debtors was 54.6%. It is contended by the judgment debtors when they confronted IDBP, armed with the information from Securities and Exchange Commission of Pakistan. IDBP accepted that its undisputed share in the forced sale value of the jointly held asset of the decree holders was indeed 54.6%. As against this IDBP's contention is that while its undisputed share was 54.6%, yet it was to negotiate with ICP, the other charge holder, for the balance, and as a result thereof, its share did increase although not to the extent it had initially determined i,e, 86%. However, the judgment debtor's claim that the determination of the share was not as per negotiations but as per law and that without a shadow of doubt the IDBP's share was no more than 54.6%. It appears that parties negotiated and agreed between themselves that IDBP would accept 54.6% of the forced sale value of the jointly held assets. The judgment debtors contend that by virtue of this agreement they came back to this honourable Court where they filed C.M. No, 231-B/2004 in C.O.S No, 66/2000 (the suit in which the compromise decree was passed) and brought the agreement on the record of the Court. It may be noted that the counsel for IDBP appeared at the motion stage without notice and as per the order of the Court, concurred to the application. This application was allowed by passing the order reproduced at Paragraph 9 above.
The judgment debtors state that in this application they had specifically mentioned that they would settle with ICP directly, the relevant Paragraph of this application has been reproduced at Paragraph 8 above.
The fact that CM 231-B/2004 was filed in which IDBP appeared at the motion stage without notice and concurred to the application establishes that what was initially agreed and made the basis of compromise decree dated 30/03/2004 did not remain valid anymore. Furthermore, IDBP accepted the payment of 54.6% of the forced sale value of the jointly held assets and by its letter dated 14/02/2005 confirmed that it had reworked its share which though not 86% of the jointly held assets of the judgment debtors, was more than 54.6%. The demand raised in this letter was for a sum of Rs,166.617 million which represented a share of 77.53% of the value of the jointly held assets in its favour. The purpose of this discussion is to establish that IDBP varied the amount that it had initially fixed and on the basis of which the Compromise Decree dated 30/03/2004 was passed. The contention of the learned counsel for IDBP that IDBP did not alter its share of 86% and did not make determination of any amount different to what appears in the compromise decree dated 30/03/2004 and whatever difference appears in the demand raised through its letter dated 14/02/2005 is reflective of a 6% discount which has been allowed against a lump sum payment is devoid of any substance as it is clearly against facts. In the compromise decree the-total amount claimed by IDBP is Rs, 174.04 million while as per letter dated 14/02/2005 the total amount claimed by it is Rs, 166.617 million. Even if 6% is deducted out of 174.04 million the balance does not come to Rs, 166.617 million. Therefore, the effort made by the learned counsel of IDBP to justify" the fresh demand being no different from what appears in the compromise decree dated 30/03/2004 though imaginative is against facts and without any genuine basis whatsoever at all. From these facts it is clear that parties by their agreement, subsequent to the passing of compromise decree dated 30/03/2004, changed the figure of Rs, 174.04 million, as entitlement of IDBP, the decree holder, to receive and the liability of the judgment debtors to pay.
Interpretation of the Decree; The learned counsel for the judgment debtors has contended that this Court as an executing Court is under an obligation to render , true and correct interpretation of the Compromise Decree dated 30/03/2004. In support of this contention he referred to Muhammad Inayat v. Ghulam Murtaza (PLD 1987 Lahore 537). In this case the Court was pleased to hold that power of execution of decree includes the power to construe the decree in order to determine its true intent. Reference to pleadings, documents and judgment was held to be permissible. This principle holds good notwithstanding the fact that the exercise involves appraisal of evidence on record or even production of fresh evidence especially when a fresh suit is barred under S.47 of the Civil Procedure Code. After all, how can an Executing Court execute a decree without determining its intent and import by a process of construction? Reference has also been made to Gokaran Singh v. Mangli and others (AIR 1921 Oudh 138) to contend that where the language of a judgment is doubtful, the benefit of the doubt ought to go to the judgment debtors. The learned counsel appearing for the respondent decree holder bank did not controvert what had been canvassed by the learned counsel for the applicant judgment debtors, namely, that this Court had not only the authority but was under an obligation to render true and correct interpretation of the compromise decree. In so doing, the Court was to take into consideration all the relevant facts including sub-secquent events and the understanding and agreements arrived at between the judgment debtors and the decree holder bank. The contentions raised by the learned counsel for the applicant judgment debtors being fully backed by law laid down by the superior judiciary are accepted and this Court will construe the decree in its true perspective.
Entitlement of IDBP Under the Decree The most significant point raised in this application is the question of how the liability of a judgment debtor is to be determined vis-a-vis a decree holder who is a joint pari passu charge holder over the assets of judgment debtors, when the settlement is arrived at under Paragraph 9(iii)(c) of BPD Circular 29. What is not in dispute between the parties is that the compromise decree dated 30/03/2004 is based upon Para 9(iii)(c) of BPD Circular 29. An interesting feature of this case is that the decree holder has not disputed that its validly registered charge on the jointly held assets between it and ICP (Investment Corporation of Pakistan) is 54.6%. The concurrence to CM 231-B/2004 dated 08/07/2004 which was filed by the judgment debtors before this Court and allowed on 09/02/2004 is not denied by the decree holder bank either. In its letter dated 22/07/2004 which the decree holder bank wrote to the judgment debtors it accepted that out of the jointly held assets, its share in the forced sale value of Rs, 114 million was not 86%, but less.
Further, it cannot be lost sight of that there were two assets of the judgment debtors which were under exclusive charge of IDBP, the decree holder. Out of these two assets, one was valued at Rs,76 million and the other was the pledged stock valued at Rs, 2.3 million. The decree holder bank received the full value of these assets from the judgment debtors. The question of what monies were advanced against these assets was not addressed in the decree. There was no division made in the amounts claimed by the decree holder to show which of its loans were being settled against the property valued at Rs,76 million. However, when it came to the jointly held assets, the decree holder bank took the stance before this Court that it was entitled to receive instead of Rs, 174.04 million, the figure which included forced sale value of the exclusively held assets except the pledged stock and the value of the assets held under a joint pari passu charge with ICP, a freshly determined sum of Rs, 166.617 millon. In arriving at this figure of Rs, 166.617 million the bank held itself entitled to Rs,76 million of the exclusively held assets and to Rs, 90.617 million out of the forced sale value of the jointly held assets. The decree holder bank makes this claim on the basis of the amount of loan that it claims against the judgment debtors, irrespective of its validly created charge against the jointly held properties of the judgment debtors. This contention of the bank is clearly against the provisions of Paragraph 9(iii)(c) of BPD Circular 29 under which the settlement between the parties was arrived at as a result whereof the Compromise Decree dated 30/03/2004 was passed. Paragraph 9(iii)(c) BPD Circular 29 is reproduced:-- "9. While allowing write-off arising as a result of settlement/compromise of cases mentioned at Para '4' above the following guidelines may be followed:-
(III) Category C: Where the outstanding amount exceeds Rs,2,500,000 Criteria Amount to be recovered Forced sale value of the security is more than the oustanding amount75% or more of the oustanding should be recovered in cash.
Forced sale value of the security is less than the outstanding amountA sum equal to Forced sale value should be recovered in cash.
Where no tangible security is availableEfforts should be made to recover maximum possible amount Forced sale value should be determined by an independent professional valuer who should be listed on the panel of valuers maintained by the Pakistan Banks' Association (PBA)
From the language of the circular it is absolutely clear that when it says forced sale value of the Security, it is the Security which the bank has under its valid charge. The decree holder bank, when it retained for itself, the sum of Rs,76 million and Rs,2.3 million, without sharing it with the other charge holder, it did so on the simple ground that these securities were under its exclusive charge and it was done without any reference to the amount of loan that was claimed and/or advanced by the bank to the judgment debtors against these securities. The fallacy of the contention raised by the decree holder bank became further evident when the contents of CM 231-B/2004 which was allowed by this Court on 09/07/2004 with concurrence of the decree holder bank are carefully examined, wherein it has been specifically stated that IDBP was to be paid 54.6% of the forced sale value of the assets under its joint charge with ICP. There was no mention whatsoever of loan liability or disbursed amount.
The reference by the judgment debtors in the said application to the payment against the jointly held assets at the rate of 54.6% was based on the validly registered charge of the decree holder bank and not to any disbursements made by it. The decree holder bank accepted its entitlement on the basis of the registered charge and not on the basis of any outstanding loan liability. The bank therefore, by raising the contention that it is entitled to share the forced sale value on the basis of its claim of outstanding loan liability is blowing hot and cold in the same breath. It wanted and did receive all the amounts representing forced sale value of the assets under its exclusive charge without reference to the outstanding loan liability of the judgment debtors. For no justifiable reason it now demands an additional share out of the forced sale value of the jointly held assets on the ostensible ground of its claim of sums disbursed by way of loan to the judgment debtors.
30. On the basis of material available on the record and the analysis of the law on the subject, this Court has no doubt that the decree holder bank and the judgment debtors agreed to settle their claims/liabilities under provisions of BPD Circular 29 and the relevant Paragraph of the said Circular was 9(iii)(c). The circulars issued by the State Bank of Pakistan are binding upon Financial Institutions and have the force of law. See Hashwani Hotels v. Federation of Pakistan and others (PLD (1997) SC 315). The Compromise Decree dated 30/03/2004 was based upon the said understanding and agreement. The decree holder bank unilaterally fixed its share at 86% of the forced sale value of the jointly held assets of Rs, 114 million in addition to a sum. of Rs,76 million, the forced sale value of security which was under its exclusive charge and Rs,2.3 million, the value of the pledged goods also under its exclusive charge. ICP, the other creditor and joint pari passu charge holder was neither party to any agreement nor to the compromise decree dated 30/03/2004. ICP challenged the unilateral determination of 86% made by the decree holder bank.
Thereafter, IDBP accepted that its determination was faulty. It also accepted its undisputed share in the forced sale value of the jointly held assets was 54.6%. The decree holder bank has received that amount which represents 54.6% of the value of the jointly held assets along with Rs,76 million and 2.3 million representing the forced sale value of the exclusively held assets and the pledged stock respectively. The amounts have been paid by the judgment debtors and the bank under its agreement allowed to the judgment debtors 6% discount on 90% of the amount, except amount paid for pledged stock. The judgment debtors have made payment of Rs,26.073 million during the pendency of this application subject to the decision of this Court on the instant application. This was the amount which the decree holder bank claimed it was entitled to receive, which claim the judgment debtors denied. The correct position as per determination of this Court is that the decree holder bank as per its clear understanding was entitled only to 54.6% of the forced sale value of the jointly held assets. The amount paid in excess thereof i,e, 26.073 million by the judgment debtors to the decree holder bank is liable to be refunded. This application is allowed and the decree holder bank is directed to refund the amount of Rs,26.073 million, which it has received in excess of its entitlement, to the judgment debtors within a period of 90 days of this order. Parties to bear their own costs.