1. GULZAR AHMAD, J. --- While hearing the listed, applications on 6.10.2008, learned counsel for defendant No. 2 raised an- objection to the maintainability of the suit on the ground that the suit property was mortgaged by defendant No. 1 with the defendant No. 2, the bank, who had filed a suit and obtained a decree of the sale of the mortgaged property and in execution it was also put to auction which could not be finalized on account of an order passed on 8.8.2008 in this suit, whereby Banking Court was restrained from confirming the bid offered by the auction purchaser.
2. Consequently, the matter was adjourned for hearing of arguments on the maintainability of the suit.
3. Learned counsel for plaintiff has contended that the plaintiff has filed suit for specific performance in respect of agreement made between the plaintiff and defendant No. 1 through his attorney and of of total sale consideration of Rs. 51,00, 000/- plaintiff has paid advance amount of Rs. 4,11,000/-.
4. He has contended that the possession of ground floor of the property was handed over to the plaintiff and defendant-No. 1 was required to clear the mortgaged dues and in terms of the injunction order dated 28.5.2004, plaintiff has deposited 50% of the balance sale consideration with the Nazir i.e. Rs. 23,50,000/-. He states that plaintiffs right is protected under Section 18 of Specific Relief Act and has relied upon the cases reported in AIR 1926 Madras 569, AIR 1926 Madras 597, PLD 1965 SC 690., 1981 SCM R 993, 1986 SCM R 888 and 2004 CLC 1482. He has further contended that issues have been framed and evidence needs to be recorded.
5. On the other hand, learned counsel for defendant No. 2 has argued that this suit has been filed on the basis of an agreement which is after the bank had not only filed recovery suit against defendant No. 1 but such suit was also decreed with order of selling of mortgaged property and in execution the mortgaged property was put to auction and the bid amount was deposited. With the Banking Court and thus the suit is barred. He further contended that all original documents of mortgaged property are lying with the bank. He has referred to Sections 41 and 52 of Transfer of Property Act and relied upon the judgment reported in 1999 SCM R 2874.
6. The counsel appearing for Intervenor has contested the claim of plaintiff saying that the agreement in the suit is not based on good faith and has relied upon the case reported in 1999 SCM R 2874.
7. I have considered that submissions made by leaned counsel and have gone through the record.
8. The facts in brief are the plaintiff has entered into an agreement to sell dated 24.12.2003 with the defendant No. 1 through his general attorney Suhail Majeed Malik for purchase of suit property that is bungalow No. B-11, measuring 400 square yards, Block-6, K.D.A. Scheme 24, Gulshan-e-lqbal, Karachi, for a total consideration of Rs. 51,0, 000/- of of which, plaintiff alleges to have paid as advance Rs. 4,11,000/- and remaining amount i.e. Rs. 46,89,000/- was agreed to be paid as contained in clause (a)&(b) of para 2 of agreement which are as follows:-
(a) Rs. 27,00,000/- (Rupees Twenty-seven lac only), (Approximately) will be paid by the Vendor at the time of Clearing of Dues of Allied Bank Ltd. After 5 days from the date of execution of this agreement.
(b) Remaining Balance amounting to Rs. 19,89,000/- (Rupees Nineteen lac eight-nine thousand only), will be paid by the Vendee to the Vendor on or before 10th January, 2004 at the time of Registration of Sale-Deed in favour of Vendee or his nominee.
9. It is alleged that on making of advance payment the plaintiff was put in possession of ground floor of suit property. It is alleged that as defendant No. 1 did not comply with the agreement, whereupon this suit was filed initially against defendant No. 1 only, but subsequently Allied Bank Limited was also joined as defendant No. 2 in the suit.
10. It is an undisputed position that defendant No. 2 had filed suit No. 46/1996 in the Banking Court-ll at Karachi for recovery of its dues, inter alia, against defendant No. 1, who was impleaded as mortgager of suit property. Banking Court decreed the suit vide judgment dated 28.4.1999, whereby the mortgaged property was ordered to be sold and in execution application No. 9/2000 mortgaged property was put to auction. The agreement that is sought to be enforced by this suit was made much after, the above proceedings have taken place in Banking Court and while title documents of the suit property are in custody of the bank. The question needs to be considered in whether the plaintiff is bona fide purchaser?
11. In the case of Industrial Development Bank of Pakistan v. Saadi Asmatullah (1999 SCM R 2874)
12. Hon'ble Supreme Court at page 2877, while considering the application of Section 41 of Transfer of Property Act, in the circumstances where the mortgaged property with the bank was said to have been sold, has observed as follows:-
9. In the present case, even if it is accepted that the disputed property had been purchased by the respondent No. 1 for consideration, the remaining conditions are not satisfied. The property had been mortgaged and the documents of title had been deposited with the appellants. The respondent No. 2 having already divested himself of the rights in the property after its mortgage, was neither the ostensible owner of the property in question for any express or implied consent of the appellants in this regard can be spelt of. As evidently the respondent No. 1 had purchased the said property without even verifying the original documents of title, which were with the appellants, he cannot be said to be a transferee in good faith. An act is said to be done in good faith when it is done with due care and attention. Therefore, Section 41 does not appear to be applicable in the present case.
13. Another interesting aspect dealing with the bona fide of the transaction between plaintiff and defendant No. 1 and having bearing on the cause of action is that the plaintiff claims to have entered into agreement to sell of the suit property with the attorney of defendant No. 1. The power- of- attorney, which has been filed with the plaint as Annexure "D" contains signatures of purported attorney namely Suhail Majeed Malik, which is altogether different from the one which appears on agreement to sell. Further, the signature of executants of power-of-attorney is not authenticated by High Commission of Pakistan of Dacca as is required by Article 95 of Qanun-e-Shahadat, inasmuch as the authentication that has been made is only in respect of signatures of Suhaif Majeed Malik, the purported attorney, and not that of executant. The power-of-attorney on the basis of which the agreement to sell is said to have been signed has no presumption in its favour of its correctness nor on the face the signature of attorney on the power-of- attorney and that on the agreement to sell at all tally or seem to be of one person.
14. It may further be noted that Section 23 of the Financial Institutions (Recovery of Finances)
15. Ordinance, 2001 (the Ordinance) creates restriction on transfer of assets and properties and its sub-section (1) provides that after publication of summons under sub-section (5) of Section 0, no customer shall without prior written permission of Banking Court transfer, alienate, encumber, remove or part with possession of any of his asset or property furnished to be financial institution as security by way of mortgage, pledge, hypothecation, charge, lien or otherwise pending final decision of the suit filed by the financial institution under this Ordinance, and any such transfer, alienation, encumbrance or other disposition by the customer in violation of this subsection shall be void and. Of no legal effect. Sub-section (2) provides that after pronouncement of judgment and decree by the Banking Court, including interim decree under Section 11, no judgment-debtor shall, without the prior written permission of the Banking Court, transfer, alienate, encumber or part with possession of any assets or properties and any such transfer, alienation, encumbrance or other disposition by a judgment-debtor in violation of this sub-section shall be void and of no legal effect. The above provisions of law clearly lays down that while the suit is pending before the Banking Court and after publication of summons the alienation, transferring or .Encumbering or parting with possession of mortgaged property without the written permission of the Banking Court shall be void and of no legal effect and after the pronouncement of judgment and decree by the Banking Court, parting with possession of any of his assets and properties and transfer alienation and encumbrance or other disposition by judgment-debtor without the written permission of the Banking Court shall be void and of no legal effect.
16. The agreement to sell was made by the defendant No. 1 on 24.12.2003, which is much after the date when the decree was passed against him by Banking Court and admittedly no written permission of Banking Court was obtained and thus the transaction of agreement to sell and parting with possession of ground floor of the mortgaged property by the defendant No. 1 is clearly hit by provision of sub-section (2) of Section 23 of the Ordinance and it will be void and of no legal effect and upon which the plaintiff cannot claim any right or seek its specific performance. No such relief can be claimed by plaintiff on transaction which is declared by law to be void and of no legal effect.
17. Section 4 of the Ordinance provides that the provisions of this Ordinance shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. By virtue of Section 23 as noted above, the transferring, alienating or encumbering of judgment-debtor's properties or parting possession with it has been declared to be void and of no legal effect. Such provision read with provision of Section 4 of the Ordinance will have overriding effect on all other laws inconsistent with the Ordinance. The Ordinance being a special law dealing with subject of recovery of finance and question relating thereto will override the general law and Section 18 of Specific Relief Act, which is relied upon by learned counsel for plaintiff being provision of general law, will have to give way to special provision of the Ordinance. Even otherwise, where the decree has been passed by Banking Court of sale of mortgaged property and in execution the property has been put to auction, there seems to be little possibility that the judgment-debtor, who is defendant No. 1 in this suit, will have right of redemption as such right of redemption will stand foreclosed on the mortgaged property being put to auction.
18. The above discussion leads only to one conclusion that the suit filed by the plaintiff is not only barred under the law but there is no cause of action and consequently, the plaint is rejected under Order VII, Rule 11, C.P.C. All pending applications are also disposed off.