' The plaintiff in this suit is a Shipping Company of Panama. Defendant No, 1 is also a Company of Panama. Defendant No, 2 is a Bank of Switzerland. The present suit has been filed by the plaintiff for the recovery of Rs, 10,00,000 stated in the plaint to be equivalent to U. S. $ 1,00,000. C. M. A. 4231/82 is an application under Order XXXIX, rules 1 and 2 read with section 151, C. P. C. Praying that this Court may order the Nazir of this Court to retain the security furnished by the Bank of America on behalf of defendant No, 1 in the amount of U. S. $ 1,00, equivalent to Pakistani Rs, 10,00,000 in Admiralty Suit No, 24 of 1981. This guarantee was furnished by the Bank of America on behalf of defendant No, 1 pursuant to order dated 6th May, 1981 in Admiralty Suit No, 24 of 1981.
' Admiralty Suit No, 24 of 1981 was filed by Messrs Bamacri S. A., defendant No, 1 in the present suit against m. v. "TAIPAN PRIDE", a vessel owned by the plaintiff in the present suit. That suit was for possession of the vessel m. v. "TAIPAN PRIDE". It was averred in that suit that under a deed dated 19th February, 1980 between the present plaintiff and defendant No, 2, Bank of Switzerland, vessel in question was mortgaged on 14th March, 1980 in favour of defendant No, 2 bank on terms and conditions mentioned in the deed of mortgage. It was then averred that under the terms of mortgage-deed, defendant No, 2 bank assigned for consideration the benefits and obligations under the deed of mortgage to one Company, Mullion Investment Corporation of Liberia. This deed of assignment was dated 16th December, 1980. According to the plaint in Admiralty Suit No, 24 of 1981, as the present plaintiff failed to pay the mortgage money in instalments to defendant No, 2 bank or to the assignee (Mullion Investment Corporation) and thereby committed default, defendant No, 2 bank and/or the assignee became fully entitled to sell or otherwise dispose of the vessel in question and accordingly by a bill of sale dated 24th December, 1980, the assignee, Mullion Investment Corporation sold the vessel to defendant No, -1 (plaintiff in Admiralty Suit No, 24 of 1981) for a consideration of U. S. $ 4,00,000 and therefore, they became fully entitled to own and possess the vessel in question Defendant No, I then averred in Admiralty Suit No, 24 of 1981 that on 20th January, 1981, their attorney called upon the present plaintiff's representative and notified him of the sale and demanded possession of the vessel in question but the same was declined. When Admiralty Suit No, 24 of 1981 was filed, the vessel in question was berthed at Karachi Port and was expected to complete discharging her cargo and sail away from the jurisdiction of this Court. It was, therefore, prayed that the vessel in question be arrested and a decree for possession of the vessel be granted to defendant No,
1. The vessel was arrested under order of this Court dated 21st January, 1981 passed in Admiralty Suit No, 24 of 1981. An application under Order XII, rule 6 read with section 151, C. P. C. Was filed by defendant No, 1 (plaintiff in the present suit) in Admiralty Suit No, 24 of 1981 being C. M. A. No, 1124 of 1981 for a direction that the possession of the defendant vessel be handed over to defendant No, 1 as the plaintiff had failed to make out any defence whatsoever against the plaintiff's claim in Admiralty Suit No, 24 of 1981 because there was a regular default in the repayment of mortgage installments on the part of present plaintiff. This application C. M. A. No, 1124 of 1981 came up for hearing before the Honourable Chief Justice on 6th May, 1981 and by order passed on the same day, the said application was disposed of. The operative part of the order dated 6th May, 1981 in Admiralty Suit No, 24/81 is as follows :- "In these circumstances, I pass the following order :-
1. That Messrs Bamacri S. A. Shall furnish security to the satisfaction of the Nazir of this Court in the sum of U. S. $ 1,00,000.
2. Messrs Bamacri S. A. Shall furnish security to the satisfaction of the Nazir to the extent of the total value of all the suits, except Suit No, 24/81.
3. That, on such security being furnished, the vessel shall stand released.
4. All the port charges and other charges payable to the Customs Authorities, or, the Karachi Port Trust shall be paid by Messrs Bamacri S. A. And
5. The security mentioned in clause 2 above shall ensure to the benefit of the plaintiffs in suits other than Suit No, 24/81 to the extent that the ultimate decree might relate to such clauses as are mentioned in subsection (2) of section 3 of the Admiralty Jurisdiction of High Court Ordinance, 1980.
W bile this order was being dictated in presence of the learned Advocates, Mr. R. F. Veerji had expressed that it may be mentioned in the order as to why the security was being fixed at $ 1,00,000. This figure was arrived at by relation to the difference between the value of the vessel and the amount of mortgage money. What is more that, in fact, such figure was proposed by Mr. Muhammad Naim and accepted by Mr. R. F. Veerji."
Thereafter on 15th December, 1981 C. M. A. No, 3606/81 was filed by defendant No, 1 as plaintiff in Admiralty Suit No, 24/81 under Order XXIII, rule 1 read with section 151, C. P. C. Stating that the present plaintiff bad failed to disclose any material defence to the Admiralty Suit No, 24/81 and also failed to prefer any counter claim and in the circumstances defendant No, 1 did not wish to proceed with Admiral ty Suit No, 24/81 any further, as the suit had become infructuous. This D application was disposed of by the Honourable Chief Justice by order dated 20th December, 1981 passed in Admiralty Suit No, 24/81. The said application was granted. The last paragraph of order dated 20th December, 1981 of the Honourable Chief Justice may be reproduced. Here :- "Mr. R. F. Virjee has lastly contended that be may he given time, so that he can file a suit against the plaintiff, and during such time, the security offered by the plaintiff in the suit, may be kept alive. Mr. Muhammad Naim opposes this request but, looking to the circumstances of this case, I am of the view that the security should be kept alive for two weeks as from today. The defendants may E file a suit within two weeks, and, in case such suit is filed they can make an application for retention of security for further time and such application shall be considered on merits, if and when may be made."
' Thereafter on 27th December, 1981, present Suit No, 810 of 1981 was filed for the recovery of Rs, 10,00,000 equivalent to U. S. $ 1,00,000. By order dated 28th December, 1981 ad interim stay was granted on C. M. A. No, 4321/82. By this order. The said application under Order XXXIV, rules 1 and 2 read with section 151, C. P. C. (C. M.\ A. No, 4231/82) will be disposed of.
' I have heard R. F. Virjee, learned counsel for the plaintiff and Mr. Muhammad Naim, learned counsel, who appeared on behalf of both the defendants. The mortgage deed dated 14th March, 1980 admittedly has very vast powers for defendant No, 2 bank in case of default in the payment of instalments of the loan on the part of the plaintiff. It is also an admitted position that the defaults have been committed by the plaintiff in the payment of instalments and under the terms of the mortgage-deed dated 14th March, 1980 various actions/steps could be taken by defendant No, 2 bank on account of the defaults having been committed by the plaintiff and there inter a/ia included :- a. To take possession of the vessel ; b. To sell the vessel by public auction or private contract at any place in the world with or without advertisement c. To delegate all or any of the powers and discretion vested in the mortgagee bank to any person. It is the case of defendant No, 2 bank that under the powers conferred upon defendant No, 2 bank, as there were various defaults in the payment of instalments b the lain fedant o 2 bank assigned its rights and benefits to Mullion Investment Corporation, which in turn sold the vessel on 16th December, 1980 to defendant No, 1 in the sum around U. S. $ 4,17,000. It was further pointed out by Mr. Muhammad Naim, learned counsel for the defendants that prior to the action taken by defendant No, 2 bank, a notice had been given by defendant No, 2 bank to the plaintiff on 9th December, 1980 through telex that unless U. S. $ 50,000 were paid by the plaintiff and an assignment of charter party covering subsequent voyage was signed, the bank will exercise their rights as mortgagee and take any steps they deem necessary to protect their interest. According to Mr. R. F. Virjee, learned counsel for the plaintiff, a prima facia case has been made out by the plaintiff against the defendants and that according to the circumstances in which the assignment had taken place in favour of Mullion Investment Corporation and the sale of the vessel had been carried out, indicate that the actions were not bona fide. It was urged that no specific notice had been given to the plaintiff either by Mullion Investment Corporation or by defendant No, 2 bank that the vessel was going to be sold and only a general notice dated 9th December, 1981, had been given. It was further pointed out by the learned counsel for the plaintiff that in case defendant No, 2 as mortgagee had wanted to exercise its rights for sale of the vessel through public auction, the plaintiff would have been entitled under the terms of the mortgage- deed to take part in the auction, and this deliberate action on the part of defendant No, 2 bank not to sell the vessel in case of default through public auction but through assignment and private treaty casts doubt on the genuineness and bona fides of the parties concerned. It was also contended that the vessel was sold at a very low price and that there was collusion between the two defendants inter se. In view of the terms of the mortgage-deed and the fact that a general notice had in fact been given on 9th December, 1981, and if there had been no other facts on record, I would have been of the view that prima facie case has not been made out by the plaintiff.
However, there are certain other facts, which are relevant for the purposes of deciding the point whether a prima facie case has been made out or not by the plaintiff. If the sale had taken place on 16th December, 1980. As is the case of the defendants, the proceeds, which amounted to about U. S. $ 4,17,000 would have been forthwith credited to the account of the plaintiff. However, there is a copy of the bank statement dated 1st January, 1981 issued by defendant No, 2 bank, which still shows an amount of U. S. $ 3,50,000 outstanding against the plaintiff company as on 31st December, 1980. This is an admitted document, prima facie if the amount had been realized through sale of vessel on 16th December, 1980, the bank statement on 1st January, 1981, could not show an amount of U. S. $ 3,50,000 outstanding against the plaintiff. It may be mentioned that the vessel had been mortgaged by the plaintiff in the sum of U. S. $ 3,50,000 with defendant No, 2 bank.
According to Mr. Muhammad Naim, learned counsel for the defendants, this bank statement must have been issued through oversight and there must be some mistake as according to the learned counsel the bank statement, even if the vessel had not been sold, would have shown a figure of more that U. S. $ 3,50,000 as considerable interest had accrued upto the period when the said bank statement was issued. At this stage it is not proper to decide whether this bank statement was issued through oversight or there must have been a mistake committed on the part of defendant No, 2 bank. It is sufficient to observe at this stage that this document, the bank statement dated 1st January, 1981, is an admitted document and no other document or material is on record to explain or clarify as to why and how this bank statement had been issued when the vessel had already been sold on 16th December, 1980.
' Then there is another document on record which is a telex dated 12th February, 1981, of defendant No, 2 bank addressed to the Director of the plaintiff, Terry Chong, which is to the following effect :- "RE: YOUR TELEX TC/DL/OKS-HKB 12th FEBRUARY, 1981 CONCERNING TAIPAN PRIDE.
RESPONSIBLE PERSONS ABSENT UNTIL MONDAY, HOWEVER BELIEVE TOTAL AMOUNT DUE INCLUDING INTEREST, INSURANCE AND FEE FOR RELEASE/BILL OF SALE ABOUT U S DOLLARS 5,50,000.-."
As observed earlier, the above telex is dated 12th February, 1981, If the vessel had already been sold as far back as 16th December, 1980, in what capacity was this telex being issued by defendant No, 2 bank was either in a position to get the sale cancelled or that the sale had not been finalized. If the sale had already taken place as far back as 16th December, 1980, without the concurrence of defendant No, 1, defendant No, 2 could not send this telex dated 12th February, 1981, that the sale could be cancelled.
' In the normal course, defendant. No, 2 bank would have sold the vessel through public auction after specific notice in that regard to the plaintiff.. If such action had been taken there could not have been any grievance under the law on the part of the plaintiff on account of the default having been committed. No doubt, as observed earlier, defendant No, 2 bank has prima facie right to assign or sell the vessel under the terms of the mortgage-deed without notice to the plaintiff but in view of the haste in which the assignment and sale had taken place-General notice is dated 9th December, 1980, and the sale is dated 16th December, 1980, and the bank statement dated 1st January, 1981, and the telex dated 12th February, 1981 prima facie casts a doubt on the transaction of assignment and sale in favour of defendant No, 1.
' In my view, therefore, a prima facia case has been made out by the plaintiff. Balance of convenience is also in favour of grant of temporary injunction. Apparently defendants have no other assets within the jurisdiction of this Court against which the decree, if passed in this suit, might be executed.
' C. M. A. No, 4231/82 is accordingly granted and it is ordered that the security furnished by bank of America on behalf of defendant No, I in Admiralty Suit No, 24/81 will not be discharged or cancelled till the disposal of this suit.