' MUNIB AKHTAR, J.---By means of a short order dated 8-9-2011, I had allowed this application, which was filed by the respondent No,3, and had vacated and recalled the order of attachment of the property of the said respondent. The following are my reasons for having done so.
2. The present petition has been filed under section 39 of the Industrial Development Bank of Pakistan Ordinance, 1961 ("the 1961 Ordinance"), whereby the petitioner seeks recovery of certain finance made available to the respondent No,1, which is a company registered under the Companies Ordinance, 1984. A sum of Rs,45,454,099.30 (as of 30-4-2002) is sought to be recovered. The other respondents, and in particular the respondent No,3, are sued in their capacity as guarantors of the credit facility provided by the petitioner. Learned counsel for the respondent No,3 referred to paras 37 and 38 of the main petition. Para 37 specifies certain immovable property of the respondent No,1, which stands charged in favour of the petitioner for repayment of the finance and also certain shares held in the respondent No,1 by the respondent No,16, which is another company registered under the Companies Ordinance. Para 38 specifies certain immovable properties of the respondents Nos.3 and 5 that have been disclosed for purposes of the 1961 Ordinance, and the present application is concerned with the property of respondent No,3 as therein specified. Learned counsel for respondent No, 3 submitted that in para 38 itself, the petitioner had taken the position that the properties of the respondents Nos.3 and 5 would be liable to meet the petitioner's claim only if the properties specified in para 37 were insufficient for this purpose, and his first point was that there was nothing on the record, which established that that was the case. Learned counsel drew attention to the order dated 16-10-2002 made in the present petition, which was to the following effect:-- "This is a petition under section 39 of the Industrial Development Bank of Pakistan Ordinance 1961 for recovery of Rs,45,454,099.30.
Let notice of this petition be issued to the respondents for 4-11-2002. As an interim agreement, properties of the respondents mentioned in paras 37 and 38 of the petition are ordered to be attached through the Official Assignee of Karachi. For this purpose, tentatively, a sum of Rs,20,000 shall be deposited with the Official Assignee."
3. Learned counsel referred to section 39 of the 1961 Ordinance and in particular to subsections (1),
(3) and (5) thereof. He submitted that since the properties identified in para 37 of the main petition were, as per his instructions, more than three times the value of the total amount being claimed by the petitioner, there was no legal basis for, or need of, the attachment of the property of the respondent No,3 and that the order made in this regard was in excess of jurisdiction and.Was for that reason liable to be set aside and the property of the respondent No,3 released from attachment.
4. Learned counsel for the petitioner opposed the present application. He referred to the application moved by the respondent No, 3, and submitted that it was filed under section 151, C.P.C.
And, ip form, sought a recall or modification of the order dated 16-10-2002. Learned counsel submitted that the 1961 Ordinance did not contain any provision for the recall of an order of attachment. He further submitted that the application was in any case misconceived and that the order of attachment was entirely lawful and proper. In this regard, he placed reliance on Industrial Development Bank of Pakistan v Allied Bank of Pakistan and another PLD 1986 SC 74 and Industrial Development Bank of Pakistan v French Food Products (Pvt.) Ltd. And others 2009 CLD 93, a Division Bench decision of this Court. Learned counsel also referred in particular to subsection (7) of section 39 and submitted that that subsection required the concerned person to show cause within the period specified, inter alia, in subsection (6) as to why the order of attachment should not be made absolute. If this was not done within that period then, learned counsel contended, the order of attachment became absolute in terms of subsection (7). His case was that the present application had, on the face of it, been filed much beyond, and after, the period specified in subsection (6).
Thus, the order of attachment had become absolute in terms of subsection (7), and the application moved by the respondent No, 3 was liable to be rejected.
5. After having heard learned counsel for the parties as above and considered the relevant record with their assistance and the case-law relied upon by learned counsel for the petitioner, I came to the conclusion that the application ought to be allowed. In order to properly appreciate the submissions of learned counsel as also the question involved, it would be appropriate to first reproduce the provisions of section 39 as presently relevant. This section states as follows:-- "39. Special provisions for enforcement of claims by the Bank.---(I) Where the Bank becomes entitled to require the immediate payment of any loan by reason of the breach of any condition of any agreement between the Bank and an industrial concern to which the loan has been .Granted or any person liable for repayment of that loan fails to repay the loan or where an industrial concern to which any loan has been granted or any person liable for repayment of that loan fails to repay the loan in terms thereof or in compliance with the notice under section 38, an officer of the Bank, generally or specially authorised by the Board in this behalf, may apply to the District Judge within the local limit of whose jurisdiction the concern carries on the, whole of a part of its business, or the office or branch of the Bank from which the loan was disbursed is situated, for one or more of the following relief, namely:
(a) an order for the sale of the property pledged, mortgaged, hypothecated, or assigned to the Bank as security for the loan and any other properties, disclosed or undisclosed, of the industrial concern or the properties, disclosed or undisclosed, of persons liable for the repayment of the loan, including guarantors; or
(b) an order for the transfer of the management of the industrial concern to the Bank or its nominee, provided that when such management is so transferred to the Bank, the Bank shall be deemed to be the agent of the industrial concern and shall manage the industrial concern on its behalf and all actions taken by the Bank on such transfer shall be deemed to be those of the industrial concern; or
(c) an injunction ad interim where there is apprehension that machinery or equipment may be removed from the premises of the concern without the permission of the Board.
(3) Where the application is for the relief mentioned in clause (a) of subsection (1), the District Judge shall,--
(a) pass an order ad interim attaching such properties referred to in clause (a) aforesaid as are likely in the estimation of the Court to fetch, on being sold, an amount equivalent to the sums claimed by the Bank together with the costs of the proceedings taken under the section; and
(b) pass an order appointing- one or more Receivers of the properties referred to in clause (a) aforesaid where in the application filed by the Bank such remedy is specifically sought.
(5) Before passing any order under subsection (3)... The District Judge may, if he thinks fit, examine the person making the application. ,
(6) At the time of passing an 'order under subsection (3), the District Judge shall issue to the concern a notice accompanied by a copy of the order, the application and evidence, if any, recorded by him and calling upon it to show cause on a date to be specified in the notice why the order of attachment ad interim should not be made absolute or the injunction be not confirmed.
(7) If no cause is shown on or before the date specified in the notice under ... Subsection (6), the District judge shall forthwith make the order ad interim absolute and direct the sale of the attached property....
(10) An order under this section for the attachment or sale of property shall be carried into effect as far as may be in the manner provided in the Code of Civil Procedure, 1908 (Act V of 1908), for the attachment or sale of property in execution of a decree as if the Bank were the decree holder.
(11) Any party aggrieved by an order under subsection (7) ... May, within thirty days from the date of the order appeal to High Court or, where the order is of a Judge of High Court exercising original civil jurisdiction, to the Court to 'which an appeal from a judgment of such Judge lies, and upon such appeal the appellate Court may, after hearing the parties, pass such orders as it thinks proper...."
6. Subsection (1) of section 39 provides generally that if any one of the conditions specified in the opening part thereof is applicable, then the petitioner may move an application before the District Judge having jurisdiction (as spelled out in subsection (1) itself), seeking any one or more of the reliefs as specified in its clauses (a) to (c). (It is of course, not in dispute that the jurisdiction conferred by section 39 is exercisable insofar as the civil division of Karachi is concerned by this Court, and therefore references to "District Judge" in section 39 shall hereinafter be references to the Court). Of the reliefs that the petitioner may seek in terms of subsection (1), it is only the one specified in clause (a) that is presently relevant. This enables the petitioner to obtain an order for the sale of any property pledged, mortgaged, hypothecated or assigned to the petitioner as security for the finance provided, and for an order for the sale of any other property, whether disclosed or not disclosed, of the borrower and also any other person liable for the repayment of the loan, including guarantors. It is not in dispute that the petitioner would be entitled to an appropriate order under clause (a) against the respondent No,3 if it is able to make out a proper case on the merits. However, for present purposes it is subsection (3) of section 39 that as of particular importance. This provides that where relief is sought in terms of clause (a) of subsection
(1) (and it is not in dispute that such relief has been sought in the present case) then the Court is bound ("shall") to make an ad interim order attaching such of the properties as specified in clause
(a) of subsection (1) as are likely, in the estimation of the Court, to fetch on being sold an amount equal to the sum being claimed by the petitioner together with the costs of the proceedings taken under section 39. Subsection (3) must be read in conjunction with subsection (6). The latter subsection provides that at the time of making an order under subsection (3), the Court is bound ("shall") to issue a notice to the person whose property is being subjected to an ad interim order of attachment, which notice must be accompanied by a .Copy of the order, the application and the evidence (if any) recorded by the Court requiring the person concerned to show cause on a date to be specified in the notice as to why the ad interim order of attachment may not be made absolute. Finally, subsection (7) provides that if no cause is shown by or before the date specified in the order under subsection (6), then the Court "shall forthwith" make the order of ad interim attachment absolute and, inter alia, direct the sale of the attached property.
7. In my view, a combined reading of the foregoing provisions requires, firstly that the Court apply itself to the properties which are sought to be subjected to the ad interim order of attachment and determine which of the properties are equal in value to the amount being claimed by the petitioner under section 39 (and the costs of the proceedings thereunder). In other words, there is no jurisdiction to make an order in respect to all the properties that may be specified. The order must be confined only to such of the properties as are required for the purposes of subsection (3). In my view, two points arise in this context. Firstly, on reading section 39 as a whole, it appears that the intent of the law is that in the first instance the properties to be considered for purposes of subsection (3) must be the properties of the borrower itself. In other words, the exercise cannot begin with the properties of the other persons, if any, liable for payment of the finance, including the guarantors. It is only if all the properties specified of the borrower appear insufficient for purposes of subsection (3) that the matter can then proceed on to a consideration of the properties of other persons which may be liable to attachment. Secondly, subsection (3) requires the Court to apply its mind towards the value of the properties concerned. This is so because as expressly stated therein, the Court is bound to make an estimation of their value. If such value cannot be ascertained from a bare reading of the petition itself, then the Court must require the petitioner to furnish such additional or other particulars as may be necessary in order to enable it to properly undertake the exercise under subsection (3) (subsection (5) is relevant in this regard).
But the matter does not end there. If at all an ad interim order of attachment is being made, then subsection (6) also makes it mandatory for the Court to issue a show cause notice to the person whose property is being subjected to order under subsection (3).
8. When the order made in the present case is considered, i,e,, the aforesaid order dated 16-10- 2002, it appears to me that, with the utmost respect, this order cannot be regarded as , being that order which is contemplated by subsections (3) and (6). As is quite clear from the order itself, it directs that notice of the petition be issued to all the respondents for the date therein specified. It then, by way of an interim arrangement, orders the properties specified in paras 37 and 38 of the main petition to be attached through the Official Assignee. In my respectful view, this order falls short of the requirements of both subsections (3) and (6). There is no indication that any material was placed before the Court regarding the value of the properties, or that the Court directed itself to the exercise of making an estimation of their value. There is also no indication that if at all such an exercise was carried out, this was done in the proper sequential manner of first considering the properties of the respondent No,1 (the borrower) itself and then proceeding to the properties of the respondents Nos.3 and 5, if the properties of the former were found to be deficient in value.
Furthermore, all that the order states is that notice be issued on the petition. It does not specify that a show cause notice is being issued to the respondents whose properties were being attached, which, as noted above, is a mandatory requirement of subsection (6). Learned counsel for the petitioner sought to defend the order and submitted that it amounted in all material respects to compliance with the requirements or subsections (3) and (6). With respect, I am unable to agree.
The order is clear on the face of it. It simply directs that notice be issued on the petition and thereafter, also simply orders ad interim attachment of all the properties. I cannot agree with the contention put forward by learned counsel that this amounts to the issuance of a show-cause notice in terms of subsection (6). It may be noted that in the French Food Products case, it was expressly noted that the Court had issued the show cause notice as required in terms of subsection (6) and thereafter, when no cause was shown, the ad interim order was made absolute (see at pg. 96 of the report). The question before the learned Division Bench was whether, a proper order of attachment having been made against the property of one of the guarantors, and the attachment having been effected in substantial compliance of the law, the subsequent sale of the property by the guarantor was hit by section 64, C.P.C. The learned Division Bench answered this question in the affirmative. As is obvious, the situation in the cited case was materially different from the one at hand.
9. Since in my view, no show cause notice as required under subsection (6) was issued, the question of the application of subsection (7) did not arise. This is so because in terms of the latter subsection the ad interim order of attachment can be made absolute only if within the period specified in the notice under subsection (6), the person concerned fails to show cause as to why the order of attachment, should not be made absolute. In other words, the issuance of a proper show cause notice under subsection (6) is a necessary condition for the application of subsection (7). The latter subsection is not a standalone provision, but (as presently relevant) is in continuation of an act begun in terms of subsection (6). Therefore, this subsection cannot be invoked without a proper show cause notice being issued. Furthermore, it is to be noted that subsection (7) itself requires an specific order making the attachment absolute, and no such order appears to have been made in the present case. Accordingly, the contention by learned counsel for the petitioner that the present application was beyond-time (i,e,, beyond the period as specified in subsection (7)) cannot be accepted. This is so because, in my view, no ad interim order of attachment of the property of respondent No,3 was made as contemplated by subsection (3) and the order of attachment actually made was not in any case followed tip by the show cause notice required in terms of subsection (6).
10. Since, in my respectful view, there was noncompliance with the requirements of section 39, I am of also of the view that the order of attachment as actually made on 16-10-2002 could be recalled by the Court. In the Allied Bank case relied on by learned counsel for the petitioner, it was not in dispute that the District Judge had properly made an ad interim order of attachment of the property of Allied Bank, which had been sued as a guarantor. Immediately on the ad interim order having been made, Allied Bank applied to have the order recalled, .Which application was dismissed by the District Judge. Allied Bank appealed against this dismissal to the Lahore High Court, and the petitioner (which was the respondent before the High Court) took the plea that the appeal was not maintainable. This was so because, as contended by the petitioner, the order of attachment had not yet been made absolute under subsection (7), and an appeal to the High Court under subsection (11) lay only against an order under subsection (7) and not an order under subsection (3). This contention was repelled by the High Court on the ground that the order of the District Judge was, for all intents and purposes, an order under subsection (7). On the merits, the order of attachment made by the District Judge was set aside, and the matter remanded for a decision afresh in accordance with law. The petitioner appealed to the Supreme Court. The Supreme Court observed (at para 12, page 79) that the order of ad interim attachment could not be deemed to be an order under subsection (7). It was further held (para 13, pg 81) that the right to appeal was the creature of the statute, and no appeal was contemplated against an order of the District Judge disposing of an application for recall of an ad interim order of attachment. It will therefore be seen that the issue involved in the Allied Bank case was quite different from that at hand. However, for present purposes, two points may be noted. It was not in issue before the Supreme Court, nor did' the Supreme Court make any observation to the effect, that the District Judge did not have the jurisdiction to consider an application seeking recall of the ad interim order of attachment. Rather, the whole matter proceeded on the basis that the District Judge did have such jurisdiction; it was just that his order on the application for recall was not appealable. Since, as noted above, this Court (as presently relevant) exercises the jurisdiction that the 1961 Ordinance confers on the District Judge, it follows that there is no bar, as such, to this Court considering an application seeking recall of an ad interim order of attachment. Secondly, when the observations of the Supreme Court in paras 14 and 15 (pp. 81-82) are considered, it is quite clear that there must be a proper application of mind by the Court to the requirements of subsection (3) and that an order of attachment cannot be made in a mechanical manner. Thus, the Supreme Court observed as follows:-- "Therefore the foundation of the jurisdiction to order interim attachment of the property is clearly based upon an estimation of the nature laid down in subsection (3)(a) of section 39." (pg. 82)
' As already noted, in my respectful view, it was precisely this exercise that was not carried out in the present case. The Allied Bank case therefore, rather than assisting the petitioner's case, supports the view that not merely is it open to the Court to entertain an application seeking recall of an ad interim order of attachment, but that the order should be recalled if the requirements of section 39 have not been complied with.
11. For all of the foregoing reasons, I had come to conclusion that the respondent No,3 was entitled to the relief sought in terms of C.M.A. 594 of 2008 and for which I had made the short order noted above.