' M. SOHAIL IQBAL BHATTI, J. --- Through this appeal, the appellants have sought an exception to order dated 02.12.2013 passed by learned Judge, Banking Court-III, Lahore.
2. The facts of the case are that the appellants entered into an agreement to sell with respondents No, 3 to 5 on 15.05.2002 in respect of the property which had already been mortgaged with respondent No, 1/bank in consideration of certain finance facilities provided to respondents No, 2 .
3. Since respondents No, 2 to 5 failed to fulfill their obligations towards respondent No, 1, suit for recovery of Rs, 81,47,171.11 was filed against respondents No, 2 to 5 by respondent No, 1 on 28.06.2003.
The present appellants on the basis of agreement to sell dated 15.5.2002 filed an application under Order I, rule 10, C.P.C. Which was accepted by the learned Judge, Banking Court-III, Lahore through order dated 24.11.2005. This order was challenged before this Court in Writ Petition No, 244/2006 filed by respondents No, 2 to 5 which was accepted and the order passed by the Banking Court-III, Lahore was set aside while declaring that the present appellants do not fall within the definition of "Customer". At this stage, it would not be out of place to mention here that the appellants deposited an amount of Rs, 5.00 Million before the Banking Court and after acceptance of Writ Petition No, 244/2006, the appellants filed an application under Section 151, C.P.C. For the release/return of the amount which had already been withdrawn by respondent No, 1/bank and subsequently on 18.05.2007, respondent No, 1/bank deposited a pay order of Rs, 5.00 Million with the Banking Court which amount was released in favour of the appellants.
4. The respondent No, 1 on 14.11.2006 filed an application under Section 151, C.P.C. Read with Section 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 for delivery of possession of the mortgaged property. During the pendency of this application, the second application was filed by the appellants under Order I, rule 10, C.P.C., which was dismissed on 07.07.2008. The Order dated 07.07.2008 was challenged by the appellants in Writ Petition No, 12329 of 2008. During the pendency of Writ Petition No, 12329 of 2008, the learned Judge, Banking Court through impugned Order dated 02.12.2013 accepted the application filed by respondent No, 1/plaintiff bank and the Bailiff of the Court was directed to hand over the physical possession of the mortgaged property to respondent No,
1. Hence, this appeal.
5. The learned counsel for the appellants argued that the appellants were bona fide purchasers who were in possession of the mortgaged property in pursuance to the agreement dated 15.05.2002. It has been further argued that the order had been passed to deliver the possession of the mortgaged property to respondent No, 1/bank in exercise of powers conferred under Section 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 which had been declared ultra vires of the Constitution in the judgment reported as Muhammad Umer Rathore v. Federation of Pakistan (2009 CLD page 257). The learned counsel for the appellants went on to argue that the appellants have deposited the entire amount claimed by respondent No, 1 and are also ready to deposit the cost of funds and it would be in the interest of justice that respondent No, 1/bank be directed to execute sale deed of the mortgaged property in favour of the appellants.
6. On the other hand, the learned counsel for respondent No, 1/bank vehemently supported the order passed by the learned Judge Banking Court-Ill, Lahore. The learned counsel for respondents No, 2 to 5 argued that the relief, which has been sought by the learned counsel for appellants through his arguments, cannot be granted in this appeal. The suit for specific performance is pending adjudication and in the suit for recovery filed by respondent No, 1 leave to defend has been granted to respondents No, 2 to 5.
7. We have considered the arguments advanced by learned counsel for the parties.
8. It is an admitted fact that the appellants entered into an agreement to sell dated 15.5.2002 in respect of the property, which stood mortgaged with respondent No, 1/bank. It is also an admitted position, as the learned counsel for respondent No, 1/bank conceded, that the property had not been mortgaged with possession. The learned counsel for the appellants has also admitted this fact that the appellants have filed a suit for specific performance on 28.6.2004, which is pending adjudication before the learned Civil Court.
' Be that as it may this Court is not convinced with the arguments advanced by learned counsel for the appellants that respondent No, 1 may be directed to execute sale deed in favour of the appellants; and would only confine itself to the legality of the order passed by the learned Judge Banking Court-Ill, Lahore dated 02.12.2013 passed in the suit for recovery filed by respondent No, 1/bank.
9. Section 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 was declared ultra vires of the Constitution and was no more the part of statute book after passing of judgment reported as Muhammad Umer Rathore v. Federation of Pakistan page 257) thus, no order could have been passed:, under the provisions of Section 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 regarding delivery of the possession of the mortgaged property to respondent No, 1/bank. After filing of suit for recovery by respondent No, 1/bank, the mortgagor/customer, after publication of summons under sub-section (5) of Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, cannot transfer, alienate, encumber, remove or part with possession of any of its assets or property furnished to the financial institution as a security by way of mortgage, pledge, hypothecation, charge, lien or otherwise pending final decision of the suit but it does not mean that the filing of the recovery suit would vest the plaintiff with the rights to obtain the possession of the mortgaged property as has been done in the present case, when it is admitted by respondent No, 1 that mortgage was not with possession. We are of the considered opinion that no order could have been passed under Section 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 for the delivery of possession of the mortgaged property.
10. The Banking Court at the most could have exercised powers under Section 16 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 which is reproduced below:-- "16. ATTACHMENT BEFORE JUDGMENT, INJUNCTION AND APPOINTMENTOF RECEIVER.-- (1) Where the suit filed by a financial institutions is for, the recovery of any amount through the sale of any property which is mortgaged, pledged, hypothecated, assigned, or otherwise charged or which is the subject of any obligation in favour of the financial institutions as security for finance or for or in relation to a finance lease, the Banking Court may, on application by the financial institutions, with a view to preventing such property from being transferred, alienated, encumbered, wasted or otherwise dealt with in a manner which is likely to impair or prejudice the security in favour of the financial institutions, or otherwise in the interest of justice:---
(a) restrain the customer and any other concerned person from transferring, alienating, parting with possession or otherwise encumbering, charging, disposing or dealing with the property in any manner;
(b) attach such property;
(c) transfer possession of such property to the financial institutions; or
(d) appoint one or more Receivers of such property on such terms and conditions as it may deem fit.
(2).
(3) .
(a)
(b)
(4)
11. The bare perusal of the above-referred provision of law manifests that the powers under this Section could only have been exercised with a view to prevent mortgaged property from being transferred, alienated, encumbered, wasted otherwise dealt with in a manner which is likely to impair or prejudice the security in favour of the bank. The application filed by respondent No,, 1/bank does not refer to any of the pre-requisites mentioned in Section 16(1) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 as transfer of the possession of mortgaged property is based upon the pre-conditions mentioned in sub-section (1) of Section 16 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. Respondent No, 1/plaintiff bank has not mentioned in its application that the mortgaged property is dealt with in any manner which was likely to impair or prejudice the interest of respondent No, 1/plaintiff bank.
11. For what has been discussed above, this appeal is accepted and the impugned order dated 02.12.2013 is set aside. Before parting with this judgment, it is directed that the amount deposited by the appellants with respondent No, 1/bank be returned to the appellants and the appellants may avail their remedy in pursuance to the agreement to sell dated 15.05.2002.