ANWAR MANSOOR KHAN, J.--- The plaintiff/applicant, National Bank of Pakistan, has filed this application under Section 12(2), CPC read with Section 151, CPC against its judgment-debtor and Muslim Commercial Bank joined as proforma defendants.
2. It is the case of the appellant that, on or about 6.10.1994 the plaintiff filed Suit No. 685/1995 for recovery of. Rs.106,433,029.00, with interest and costs. By a judgment of this Court dated 3.4.1997 the suit was decreed for the aforesaid amount, together with interest at the rate of 8% per annum with quarterly rests from the date of institution of the suit till payment. The judgment-debtor, however did not pay the decretal amount. However, in the meanwhile, the State Bank of Pakistan issued a Circular No. 19, dated 5.6.1997, by which certain incentives were offered to the borrowers who had defaulted in the payment of the dues of the banks and DFIs. Subsequently, another Circular No. 36, dated 17.7.1997 was also issued, by which all those against whom legal proceedings had commenced or decree had been passed were also included within the purview of Circular No. 19. In the wake of this situation, according to the applicants, they gave a notice calling upon the judgment-debtor to settle the outstanding which, in contain in the Circular No. 19, dated 5.6.1997, was substantially reduced.
3. According to Mr. Gulzar Ahmed, Advocate, there were three distinct finances being C/F1, C/C 92 and C/C 120. It is stated by Mr. Gulzar that in all the three loans/finances granted and disbursed, that were due and payable, for which a decree was also granted, separate notices for the specified amounts in each finance, recalculated/reduced incentive, in the light of aforesaid Circular of the State Bank of Pakistan, were given. The total debt of the three accounts for which notices were given, was much less than the actual decretal amount. It is stated that the first set of the notices for 'the finances were not replied, whereafter another set of the final notices in respect of each finance was given for availing the incentive scheme for defaulters. In this, one of the finances namely Account No. C/F-1 was further reduced. According 'to Mr. Gulzar Ahmed, Advocate, the judgment- debtor gave an undertaking, in respect of the said Account No. C/F1 that, they would be liable and would pay to the bank a sum of Rs.4,783,800/- which, correspondence o the second notice relating to Account No. C/F-1, given to the judgment-debtor under the Incentive Scheme for Defaulters.
According to him, the other two Accounts namely C/C 92 and C/C 120 though offered, but were not accepted by the judgment-debtor, and as such were not compromised under the said Incentive Scheme. Subsequent to the said undertaking, the judgment-debtor paid the entire amount of Rs.4,783,800/- alongwith other demands which included legal charges etc. It is after this,, that a letter was written by the Judgment-Debtor on 9.6.1998 that the Accounts Nos. C/C 92 and C/C 120 were merged and converted into C/F 1, the total of which was Rs.45,56,000/- which amount had been paid alongwith interest to National Bank of Pakistan per the State Bank of Pakistan Incentive Scheme. This, according to Mr. Gulzar Ahmed, Advocate was followed by a letter of the Bank requiring the defendant to pay certain other charges which were also paid. Thereafter the judgment-debtor complained to the State Bank of Pakistan who decided, that the balance amount after settlement in Account No. c/F-1, was payable by, the borrower. Subsequently, the said order was reviewed by the State Bank of Pakistan whereby it held, that the payment had been made in full by the Judgment-Debtor. The National Bank of Pakistan again moved the State Bank of Pakistan, for the review of the subsequent decision giving, details therein and stating, that, in fact, only one account had been settled and the balance were yet to be settled. The State Bank of Pakistan wrote back to the plaintiff by letter dated 1.6.1998 that the subject case be referred to their own the Board of .Directors, who were competent to decide the case on merits and in line with State Bank of 'Pakistan instructions/guidelines issued from time to time.
4. The Judgment-Debtor, meanwhile, moved an application under Order XXI, Rules 1 and 2, CPC seeking an order from this Court that the decree stood satisfied on account of State Bank of Pakistan's Incentive Scheme, seeking directions to the plaintiff, to execute the Deed of Redemption and return the documents of the property mortgaged in consideration of the loan. The said application was replied by the decree-holder by filing Counter-Affidavit, in which it was stated that the representation was pending decision with the State 'Bank of Pakistan, and that the Bank had made various representations to the State Bank of Pakistan against the decision given by it, This Counter-Affidavit was filed in July, 1997, when, it seems, the matter was pending with the State Bank of Pakistan. Subsequently, a rejoinder was filed by the Judgment-Debtor alongwith which a letter dated 1.6.1998 was also filed by the Judgment-Debtor which it was categorically stated that, "The subject case may be referred to your Board of Directors who are competent to decide the case on merit and in line with State. Bank of Pakistan instructions/guidelines issued from time to time.
5. This Court by an order dated 24.8.1998 allowed the application moved by the Judgment-Debtor, and recorded satisfaction of the decree. It is the case of the applicant that the fraud was perpetuated on the Court when the correct facts were not pleaded before it whereby, even the Court held in its order that, "Mr. Shehenshah Hussain has pointed from letter dated 1st June, 1998 by the State Bank of Pakistan and addressed to the plaintiff-bank that the matter is no more sub judice". It was also stated that when only one loan was paid off, the other loans were due and payable, which was also not disclosed. According to him, this itself shows that incorrect facts were mentioned by which, despite the fact that the matter was pending adjudication, and the two loans were not paid off, an order was obtained by misrepresenting the correct and true facts.
6. It is the case of Mr. Shehenshah Hussain that the facts were before the Court and if the Court had misread the facts or any documents or evidence that was before it, this Court under the provisions of Section 12(2), CPC could not sit in appeal and has to decide the matter within the parameters of Section 12(2), CPC. He has read the aforesaid provisions of Civil Procedure Code which are as under:- "(2)Where a person challenges the validity of a judgment, decree or order on the plea of fraud, misrepresentation or want of jurisdiction, he shall seek his remedy by making an application to the Court which passed the final judgment, , and not by a separate suit."
7. Mr. Shehenshah Hussain contends, that there are three specific instances, by which this Court could have power to set aside an order passed by this Court. He stated that such are, where that order has been obtained by fraud, misrepresentation or there was lack of jurisdiction. According to him, none of 'these are available to the proceedings. According to him, the letter dated 1.6.1998 was, in fact, before this Court. It is his case that notwithstanding the fact that letter dated 1.6.1998 was before this Court, the said letter ought to have been produced by the applicant who wherein possession thereof, as it was addressed to the Bank. According to him, the case was decided on merits and having decided the case on merits, the Court had held that on the basis of the documents available before it that the execution stood satisfied. He has referred to the judgment in the case of Iftikhar Hussain and others v. Hameed Akhtar Niaz (1996 S.C.M.R. 1942) in which it has been held, "An application under Section 12(2), CPC is maintained only in cases where a consent decree has been obtained by misrepresentation, fraud or the order is without jurisdiction." He refers to the case of Lal Din and another Vs. Muhammad Ibrahim (1993 SCMR 710) which case refers to the other cases namely: Mst. Izzat and another Vs. Kadir Bux (PLD 1959 Karachi 221) and Mst. Safia Bibi Vs. Mst. Aisha Bibi (1982 SCMR 492) and the Honourable Supreme Court quoted the following observations of the High Court:- "Applying this test, to the facts of this case, it appears to me that it was a case in which the respondent's claim was false to his knowledge and was supported by a false document and the ground, on which the decree is sought to be set aside, caniot, therefore, avail the petitioners ......
Indeed, an inquiry is necessary where the ground of fraud is available. But where, as here, the facts alleged do not amount to fraud within the meaning of Section 12(2) of the C.P.C. To insist upon an inquiry is to insist upon an exercise in futility."
According to Mr. Shehenshah Hussain, when the facts were before this Court, there was no question of fraud or misrepresentation of facts, thus, the order was passed by the Court lawfully within its jurisdiction.
8. Mr. Gulzar Ahmed had taken time yesterday, to submit further arguments. He states that the judgment cited by. Mr. Shehenshah Hussain which has been reported in 1993 S.C.M.R. 710 has been misread by him and that in the judgment itself the application under Section 12(2), CPC was allowed. According to him, para 8 of the judgment categorically states:- "In deciding such a question as has arisen, the principle governing it should have been kept in view, recognized and strengthened. The underlying principle has been enunciated in the case of the Chief Settlement Commissioner, Lahore v. Raja Muhammad Fazil Khan and others (Pt.D 1975 SC 331), in the following words:- "It seems to us that while there are cases in which the power of a Court or Tribunal of special or limited jurisdiction to suo motu recall or review an order obtained from it by fraud has been doubted, yet the preponderance of judicial authority is in favour of conceding such a power to every authority, Tribunal or Court on the general principle that fraud vitiates the most solemn proceedings, and no party should be allowed to take advantage of his fraud. There can be no rational basis for discriminating' between the powers available in this behalf to a Court of general jurisdiction and a Court or Tribunal of special or limited jurisdiction, for in either case the effect of fraud is the same, and the duty to undo that effect must lie on the authority. On which fraud is practised. We are, therefore, of the view that even a Tribunal of limited or special jurisdiction has the power to suo motu recall or review an order obtained from it by fraud .
9. He states that in the present case also where a sum of about Rs.106,433 millions were payable to the plaintiff/decretal, the Judgment-Debtor cannot be allowed to make payment of an amount which was much less than the Decretal Amount i.e. Approximately Rs.4,783 millions. According to him. Even if the aforesaid circulars are applied, then also this amount could not be reduced to that extent.
According to him, the fraud was apparent, that there were in all three accounts, the details of which were not placed before the Court. The undertaking was taken up and misrepresented as a total payment agreement. It is on the basis of the said undertaking which was only in respect of one account, the Judgment-Debtor claimed that they had paid the entire liabilities. Such was contained in his letter dated 9.6.1998, written to the National Bank of Pakistan, by the Judgment- Debtor. According to him, this was a clear mis-statement and misrepresentation of facts playing a fraud on the Court and, therefore, notwithstanding the fact that the proceedings were pending for determination, as to whether those two accounts were also to, be paid for, this Court passed an order recording satisfaction of the decree. He has also referred to the case of timer Bux and two others Vs. ADM Khan and 12 others (1993 SCMR 374) in which it has been held, "This Court affirmed the view of the High Court and held that a judicial or quasi-judicial determination , to inspire confidence and to command respect must be based on record or material beyond suspicion and reproach and in consequence refused leave to appeal."
10. He has also referred to the case of Government of Pakistan Vs. Khalil Ahmed (1994 SCMR 782) in which it was held, after considering all authorities on the point, as under:- "It appears, that the learned Trial Court, overlooked the pleadings of the parties, the issues framed and the contents of the application for compromise in the light of the provisions of Order XXIII, Rule 3, C.P.C. And Section 23 of the Contract Act, before decreeing the suit, otherwise it would have come to its notice that the agreement itself was void and no 'effective .Decree touching the property of third party could have been passed. In fact the impugned decree nullified the effect of the orders of the public authorities earlier passed in respect thereto, for instance on the migration of evacuee owner, the treatment of the land in dispute as evacuee property, its notification as building site by the Chief Settlement Commissioner, after repeal of Evacuee Laws the property having vested in the Provincial Government and its transfer to various agencies were actions taken by the public authorities in discharge of their functions. These actions could not have been set at naught in, collateral proceedings rather the Courts were under legal obligations to explore every possible explanation to their validity. In this regard it was held in The Chairman, East Pakistan Railway Vs. Abdul Majid Sardar (PLD 1966 SC 725) and Lahore Improvement Trust v. The Custodian, Evacuee Property and others (PLD 1971 SC 8111) that the acts performed and orders made by public authorities, deserve due regard by the Courts and every possible explanation for the validity should be explored.
Lastly, we are conscious of the general principle that fraud vitiates even the most solemn proceedings and that the Courts of general jurisdiction are competent to suo motu decrees obtained from it by fraud, as held in Chief Settlement Commissioner v. Muhammad Fazil (PLD 1975 SC 331) and ordinarily we would have remanded the case to the Trial Court, for further proceedings in the matter, but as the claim of the plaintiff is fraudulent which is apparent from the record, the remand of the case in our view would be sheer wastage of time and merely an exercise in futility."
11. Mr. Gulzar Ahmed has referred to the case of Chief Settlement Commissioner, Lahore Vs. Raja Muhammad Fazil Khan and others (PLD 1972 SC 331) on which most of the aforesaid judgments had relied upon and has further referred to the case of Managing, Jammu and Kashmir, State Property in Pakistan Vs. Khuda Yar and another (PLD 1975 S.C. 678) and has read before this Court the important provisions that have been discussed as under:- "The proposition could hardly be disputed that the principal object behind all legal formalities is to safeguard the paramount interest of justice. In fact while considering the importance of legal technicalities and rules of procedure in the administration of justice, it is inevitable to recall the various evolutionary stages in the transition from justice without law of primitive society to justice in accordance with law of modern society and the conflict between equity and law in judicial history.
It cannot be denied that legal precepts were devised with a view to impart certainty, 'consistency and uniformity to administration of justice and to secure it against arbitrariness, errors of individual judgment and mala fide. Over a period of time this development of codes and rules led to the evolution of what is called "jurisprudence of Conception" a system of logical deduction from fixed premises. In order to avoid the rigidity and hardship of ultra formalism recourse is had to principle of equitable application and interpretation of legal precepts and conferment of judicial discretion on the Courts as envisaged by 'Order XLI, Rule 33 of the C.P.C. In regard to Constitutional power of this Court to do complete justice in all matters. These two provisions read together lead to the irreparable conclusion that mere technicalities unless offering an insurmountable hurdle should not be allowed to defeat the ends of justice. It was observed by Kaikaus, J. In Imtiaz Ahmed v.
Ghulam A.I as follows:- "I must confess that having dealt with technicalities fore more than forty years, out of which thirty years are at the Bar, I do not feel much impressed with them. I think the proper place of procedure in an system of administration of justice is to help and not to thwart the grant to the people of their rights. All technicalities have to be voided unless it be essential to comply with them on ground of public policy. The English system of administration of justice on which our own is based may be to a certain extent technical but we are not to take from that system its defect. Any system which by giving effect to the form and not to substances defeats substantive rights is defective to that extent. The ideal must always be a system that gives to every person what is his."
"It was, as I have already remarked, a res of the highest order and when it was placed in jeopardy by the petitions moved on these cases, it was the duty of the High Court in interpreting and applying the relevant instruments including the Constitution to bear in mind' the great maxim ut res mages valeat qvam pereat that is to 'say, that the affairs should prosper rather than be brought to destruction. It may be that the maxim that was borne in mind was rather fiat justitio rual coelum, that is to say let justice prevail though the heaven should fall."
12. Mr. Gulzar Ahmed has lastly referred to the judgment in the case of Messrs Vulcan Company (Pvt.) Ltd., Lahore through Managing Director Vs. Collector of Customs, Karachi and 3 others (PLD 2000 S.C. 825) in which it has been held that, "Courts are not expected to .Act in aid of injustice to perpetuate illegalities or put a premium on ill-gotten gains."
13. Mr. Rizwan Ahmed Siddiqui, Advocate for respondent No: 9, Muslim Commercial Bank states that respondent No. 9 has arrived at a settlement with M/s Khairpur Textile Mills Ltd.
14. I have perused the file and the record, as also the judgments cited by counsels. There is no cavil as to the facts of the case and both the parties agree on the document that have been filed alongwith the pleadings herein. The only question is that when the letter of 1.6.1998 was available and present on record, the learned Judge had relied upon the statement of the Judgment-Debtor stating that Mr. Shehenshah ,has pointed from the letter dated 1.6.1988 that the matter was no more sub judice. The fact of the matter is that there were three separate and distinct accounts. The Judgment-Debtor had misrepresented before this Court, that all the accounts bad been settled, and that C/F-1 was an account which had in it the total liability of C/C-1, C/C-92 and C/C-120. This misrepresentation was, in fact, a fraud caused on the Court which led to the passing of the order dated 24.8.1998. Had this misrepresentation not been made before the Court, satisfaction would not have been recorded. The facts as contained in the undertaking of 2.9.1997 were that only one account was settled. From the authorities cited by Mr.Gulzar, it is clear that the scope of Section 12(2), CPC shall cover the misrepresentation and fraud perpetuated on Court to obtain orders. The Hon'ble Supreme Court has held that the Courts are not expected to act in aid -of injustice to perpetuate illegalities or put a premium on ill-cotton gains. Admittedly, the money in accounts C/C-92 and C/C-120 are distinct from C/F-1 which have not been repaid. I am clear in my mind that not pointing out the true fact has resulted in an incorrect decision. If the facts, would have been brought in their correct perspective, it would have resulted in correct decision. Fraud has been played on the Court and the facts have been misrepresented. I am in full agreement with the arguments advanced by Mr. Gulzar Ahmed, Advocate for the applicant.' The application is; therefore, allowed as prayed. The order dated 24.8,1998 is set aside.