' ZAFAR AHMED RAJPUT, J.---This application (C.M.A. No,329/13) has been filed by the Decree Holder seeking therein directions for J.D No,4 (Karachi Stock Exchange Guarantee Limited) to auction the TRE Certificates/shares of the J.D No,2 and to pay the sale proceed of the same to him in satisfaction of the decree.
2. Necessary facts, for the disposal of this application are that the suit bearing No,833/2006, filed by the plaintiff/D, H, was decreed by this Court vide judgment and decree dated 11-5-2011 and 21-5- 2011 respectively, holding that defendants Nos. 1 and 2 jointly and severally to pay the plaintiff Rs,31,50,000 and also deliver 10,00,000 shares of Japan Power Generation Limited. The amount of which comes to Rs,45,00,000 and in the alternative to pay an amount of Rs,45,00,000 from 4-7- 2003 till payment with mark up at the latest prevailing bank rate.
3. Thereafter, the decree holder filed an Execution Application bearing No,14/2011 before the Court of learned VIth Senior Civil Judge Karachi (South). As due to process of demutualization under the Stock Exchanges (Corporatization, Demutualization and Integration) Act, 2012 (hereinafter referred to as "the Act of 2012") the membership cards of the Stock Exchanges had been converted into shares and Trading Rights Entitlement (TRE) Certificates; therefore, during the proceedings of the execution application, the Stock Exchange Membership Card of the J.D. Nos.1 and 2 was attached by the said learned Civil Court. Thereafter, the decree holder moved an application under Order XXI, Rule 64, read with section 151, C.P.C. For the sale of the shares/TRE of the J.D. No,2; meanwhile, issue of pecuniary jurisdiction of said Civil Court arose, and the execution. Application of the decree holder was returned to him by the said learned Civil Court vide order dated 31-7-2013 for its presentation before the Court having jurisdiction.
4. Upon receiving the notice of the instant application the J.D. No,4 filed a statement dated 25-1- 2014 along with the copy of the Counter Affidavit filed on behalf of J.D. No,4 in Execution Application No,14/2011, wherein it has been stated by the J.D. No,4 that in accordance with the Act of 2012, the J.D. No,4 having converting into a Company limited by shares, has allotted to J.D. No,24,007,383 shares of the par value of Rs,10 each, as per their entitlement; and out of above-mentioned total shares to J.D. No,2, 2.60% shares would remain in Blocked Account with Central Depository Company of Pakistan Limited together with shares belonging to all other shares holders of the J.D.
No,4, which will be later on disposed-off to strategic investors and public by the J.D. No,4 as required under the provisions of the Act of 2010. It has also been stated that in addition to allotment of such shares, J.D. No,2 has also been issued TRE Certificate by J.D. No,4. It has further been stated that apart from instant case, the following additional Court cases are also pending against J.D. No, 2 in different Courts:
(i) Suit No,1254/2009 (High Court Sindh)
Ch. Tanveer Ahmed v. Investec Securities Ltd and others.
(ii) Suit No,1388/2008 (High Court of Sindh) Investec Securities Ltd. v. KSE and others
(iii) Suit No,996/2005 (High Court of Sindh)
H. M. Idrees H. Adam v. Investec Securities Ltd. And others.
(iv) Execution Application No,23/2004- Suit No,397/1999 (Banking Court No, I, Karachi)
K.A. S.B. Bank Limited v. Investec Securities Ltd.
' It has also been indicated that in Execution No,23/2004 of Suit No,397/1999 (serial No, iv), the learned Banking Court No,1, Karachi has also issued warrant of attachment with respect to Membership Card of J.D. No,2.
6. Consequently, vide order dated 6-3-2014, notice was issued to K.A.S.B. Bank Limited to place on record the certified copies of the judgment and decree passed in Suit No,397/1999 or any other order passed in the Execution Application No,23/2004 regarding share certificate etc. Of which attachment has been sought in the instant execution application. In compliance thereof, the official of K.A.S.B. Bank Limited filed certain documents under statement dated 20-8-2014 alleging therein that in Execution Application bearing No,23/2006, filed by the K.A.S.B Bank Limited against J.
D. No,2, the application of the Bank for issuance of writ of attachment of shares and TRE Certificates has been allowed by the Banking Court No,1, Karachi on 17-2-2014.
7. On 20-8-2014 the decree holder and the officials of K.A.S.B. Bank Limited, namely, Noman Ahmed, Regional Manager, SAM (South) and Sultan Khan, Relationship Manager K.A.S.B Bank also filed a Joint Statement requesting therein that TRE certificate and the shares of Karachi Stock Exchange in the name of J.D. No,2 may be auctioned through Nazir of this Court and out of sale proceed the amount of Rs,6,477,547 may be withheld with the Nazir of this Court and the remaining sale proceed of the above said certificate and shares may be released to the decree holder in the partial satisfaction of this execution.
8. Mr. M. R. Sethi, learned counsel for the decree holder, has mainly contended that the instant application has been moved for the satisfaction of the decree as despite having judgment and decree with him; the decree holder is suffering and being denied from the fruits of the decree. He has further contended that after completion of the demutualization process, TRE Certificates pertaining to J.D. No, 2 under attachment are with the custody of the J.D. No,4 and as such under its rules, regulations and by-laws; the J.D. No,4 is also under legal obligation to liquidate the decreetal, amount by sale of TRE Certificates of J.D. No, 2 through auction and by invoking the funds available with it.
9. Mr. Tariq Qureshi, learned counsel for the J.D. No,4, inviting the attention of this Court to subsections (1) and (11) of section 16 of the Act of 2012 has contended that the J.D. No,2 was not registered with J.D. No,3 as a "broker" therefore, J.D. No,2 was required to be registered not later than two years from the date of demutualization and the deadline of the compliance of said provisions was 26-8-2014 and since the TRE Certificate of J.D. No,2 was under suspension and attached by this Court; therefore, a letter bearing Ref. No, KSE/Legal-Gen-4659 dated July 15, 2014 was sent to J.D.
No,2 by the J.D. No,4 but no compliance of the said provisions of the Act of 2012 was made.
10. Mr. Muhammad Zia Qureshi, learned counsel for K.A.S.B. Bank Limited, recorded his no objection on grant of this application provided that the decretal amount i,e, Rs,6,477,547, claimed by the K.A.S.B. Bank Limited in Execution Application No,23/2004 arisen out of Suit No,397/1999, pending adjudication before the Banking Court No,I, Karachi against the J.D. No,2 is withheld with the Nazir of this Court and the remaining sale proceeds of the TRE Certificate and shares be released to the decree holder in the satisfaction of this execution application.
11. I have heard the learned counsel for the parties and perused the material available on record mainly on C.M.A. No,329/2013.
12. In order to appreciate the contention of Mr. Tariq Qureshi, learned counsel for the J.D. No,4, it would be appropriate to reproduce here the provisions of subsections (1) and (11) of section 16 of the Act of 2012 hereunder:-- "16. Trading rights.---(1) An initial shareholder who is issued a TRE certificate under section 5 shall, if not already registered as a broker with the Commission, be entitled to be so registered not later than two years from the date of demutualization provided that he meets the fit and proper criteria: ' Provided further that such TRE Certificate holder shall commence business not later than six months from the date of registration as a broker.
(11) Failure of a person, holding a TRE Certificate including an initial shareholder, to get himself registered as a broker or commence business within the different periods specified in this section, or in the case of an initial shareholder, to transfer the TRE certificate within two years from the date of demutualization, shall result in the lapse of such TRE Certificate."
13. It appears that after filing of instant execution application the notices were issued to J.Ds and the service was held good by the Deputy Registrar (0.S) vide order dated 25-9-2013 and thereafter execution application, along with C.M.A. No, 229/2013, was placed before the Court for hearing. On 14-10-2013 one Muhammad Siddique appeared before the Court on behalf of J.D. No, 1 and requested for time to engage a counsel in the matter, the request was allowed. Then on 26-11-2013 the representative of J.Ds. Nos. 1 and 2, namely, Waseem appeared and inform the Court that the J.Ds. Were required to appear before the Court of District Judge in a bail matter; therefore, they could not appear before this Court. However, the Court directed to J.Ds. To do the needful within two weeks, failing whereof the application would be heard and decided according to law. It further appears that till date the J.Ds. Nos. 1 and 2 have failed to satisfy the decree; even they did file objections to execution application and C.M.A. No, 229/2013.
14. As regard the provisions of section 16 of the Act of 2012, I am of the view that since the TRE Certificate of J.D. No 2 has already been suspended/attached by the order of the Court, there should not be any undesirable effect of subsections (1) and (11) of section 16 of the Act of 2012 if the same is still un-registered.
15. For the aforesaid facts and circumstances of the case, I allow C.M.A. No.229/2013 in following terms:
(i) J.D. No. 2 is given 30 days' time, from the date of this order, to satisfy the decree
(ii) In case J.D. No. 2 fails to satisfy the decree within specified period, the Nazir of this Court shall auction the TRE Certificate/shares of J.D. No.2, through J.D. No.4 as per provisions of Act of 2012.
(iii) Transfer of TRE Certificate/shares of J.D. No.2 on the name of auction purchaser shall be subject to confirmation of auction by this Court.
(iv) D.H. Shall bear the costs of auction proceedings initially; however, finally it will be paid by the J.D. No.2 and adjusted from the sale proceeds.