' We had sought certain clarifications from the learned counsel for the parties with respect to the application of the Incentive Scheme introduced vide B.P.R.D. Circular No,19, dated 5-6-1997 and both Messrs Nafees Siddiqui and Kazim Hassan appeared before us today. Mr. Nafees Siddiqui drew our attention to a letter that he received from the appellant according to which even if the respondents are found entitled to the benefit of the Incentive Scheme they would still be liable to pay further amount of Rs,22,922,502.21. Since we are clearly of the opinion that in any event the respondents would not be entitled to deduct the amount of Rs,18,676,909.73 for the purpose of calculating the principal and such amount had to be treated as payment towards interest/mark- up in terms of the B.P.R.D. Circular No,36 of 1997, such deduction was not permissible. We would, therefore, allow this appeal, set aside the impugned order and direct that the decree cannot be deemed to have been satisfied unless a further amount of Rs,22,922,502.21 is paid to the appellant.
The execution application may therefore, be treated pending and the appellant-decree-holder will be entitled to prosecute the same before the learned Single Judge exercising Banking Court jurisdiction.
' Since we did not consider it expedient to withhold pronouncement of judgment we have announced the short order today, detailed reasons to follow. JUDGMENT ' SABIHUDDIN AHMED, J.---This appeal is directed against an order of a learned Single Judge, exercising Banking Court jurisdiction, dated 3-6-1998 passed in Execution Application No,6 of 1998, whereby satisfaction of a decree, dated 7-9-1995 was recorded.
2. The facts necessary for the determination of the controversy between the parties appear to be that in 1975 the appellant had granted a long term facility to the respondent which was extended from time to time. Admittedly certain amounts were disbursed to the respondent directly, whereas others were paid by the appellant to the Industrial Development Bank of Pakistan (IDBP) in discharge of the respondent's liability. According to the appellant such amount works out to Rs,38,488,84.36, but according to the respondent, as admitted in their letter to the appellant, dated 27-8-1997 the amount of loan was Rs,37,600,000 out of which repayment to the extent of Rs,17,60,000 was made by the respondent through allowing deduction of 5% of export proceeds effected through the appellant. Be that as it may after taking into consideration the interest accumulated, the appellant filed a Suit No,509 of 1994 for recovery of Rs,99,68,856, on the original side of this Court. An application for leave to defend was preferred by the respondent but it came to be dismissed and the suit was decreed with costs on 24-4-1995. The respondent preferred H.C.A.
No,160 of 1995 against the aforesaid judgment and decree. The aforesaid appeal came up before us alongwith the present appeal on 12-4-2001, and when we requested learned counsel for respondent to point out the efficacy of such appeal when the order impugned in this appeal related to the satisfaction of the decree, he did not press the appeal on the ground of having become infructuous. It was dismissed as such vide order, dated 12-4-2001.
3. In any event reverting to the facts of the present appeal it may be stated that during the pendency of the execution application State Bank of Pakistan issued various Circulars, in the purported exercise of power under section 33-B of the Banking Companies Ordinance, 1962, providing certain incentives to long term bank defaulters and sick units for making certain payment to the bank. The following Circulars are relevant for the purpose of the present case, relevant contents whereof will be discussed in the later part of this judgment:
(i) B.P.R.D. Circular No,19, dated 5-6-1997.
(ii) B.P.R.D. Circular No,32, dated 8-7-1977.
(iii) B . P.R. D . Circular No,36, dated 17-7-1997.
(iv) B. P. R. D . Circular No,57, dated 8-12-1997.
4. It appears that on 27-6-1997 the respondent addressed a letter to the appellant proposing to avail the benefit of B.P.R.D. Circular No,19 of 1997 and offering to make payment of total amount of Rs,21 million in a liquidation of their liability towards the appellant. It was claimed that according to their accounts the principal amount was Rs,37,600 out of which Rs,17,600,000 already stood paid by deducting 5% of export proceeds. Hence the outstanding balance was Rs,20 million and after addition of 5% mark-up contemplated in para.4 of the Circular they were liable to pay Rs,21 million.
They were willing to make a down payment of 10% in terms of B.P.R.D. Circular No,36 through encashment of Defence Saving Certificate already deposited with the appellant in the amount of Rs,11 million. Whereas the remaining amount of Rs,10 million would be adjusted before 5-12-1997.
Apparently the respondent received no communication in response to the aforesaid letter.
However, on 23-12-1997 the appellant received a letter signed by two officers of the appellant-bank stating that the appellant could make payment of Rs,22,922,502.21 in full and final settlement of their account in terms of the incentive scheme. The appellants vide their letter of the following day i,e, 24-121997 informed the appellant that the offer was acceptable to them. They authorised the appellant to encash the Defence Saving Certificate of the face value of Rs,5 million as down payment and agreed to pay the remaining balance on or before 16-2-1998. Admittedly Rs,12,500,000 were recovered by the appellant through encashment of certificates and a further amount of Rs, 10,422,502,21 was paid by the respondent vide cheques, dated 14-2-1998.
5. Having made the aforesaid payment the respondent moved C.M.A. No,4 of 1998, in Execution No,6 of 1998 under Order 21, rule 2, C.P.C. Praying that satisfaction of the decree be recorded. The application was contested by the appellant who urged that the offer contained in the letter, dated 23-12-1997 was unauthorized and had been procured by the respondents in collusion with certain officers of the Bank to deprive the Bank of the benefit of a decree of much higher amount i,e, Rs,99,681,865 it was further stated that the appellant had filed complaints for prosecution of the officers signing the letter, dated 23-12-1997 and that in any event the offer was contrary to the requirement of the State Bank Circular No, B.P.R.D. No,19, dated 5-6-1997 as subsequently amended from time to time. Elaborating this contention it was argued that certain payments had to be made within the dates specified in the Circulars and since the respondents failed to do so, they could not claim benefits thereunder.
6. The learned Single Judge, repelled the first contention observing that irrespective of the appellant's right to claim damages from its own officers or to proceed with criminal prosecution.
The fact that an offer was made to the respondent who accepted the same and paid the amount claimed, the latter stood protected under the doctrine of indoor management. With regard to the second contention learned Single Judge after going through different circulars took the view that time for payment had been extended from time to time and, therefore, the time limit prescribed could not be considered to be of the essence for the purpose of availing benefits under the scheme. Accordingly the application was granted and the execution application was disposed of.
7. The appellant-bank has come in appeal against the aforesaid order, dated 3-6-1998, Mr. Nafees Siddiqui, learned counsel for the appellant, reiterated the contention urged before the learned Single Judge and primarily argued that the B.P.R.D. Circular had the force of law and the benefits provided thereunder could not be availed by customers who fail to fulfil the conditions laid down therein, including payment of a specific amount within a given time frame. He further contended that "offer", dated 23-12-1997 being contrary to the requirement of law could not be given any legal effect and its acceptance on the part of the respondents was inconsequential. On the other hand Mr. Kazim Hassan, learned counsel for the respondent after referring to various circulars issued from time to time extending dates of payment argued that the object was to secure maximum recovery from bank's defaulters by providing incentives and to assist sick industrial units in acquiring the capacity to stand on their own legs. As such according to the learned counsel time for payment was never of the essence and in any event the payment made by the respondents up to 14-2-1998 fully entitled them to the benefit of the incentive scheme. Since questions of law of considerable importance appeared to be involved, We also requested Mr. Mansoorul Arifn, Senior Advocate to assist us as amicus curiae.
8. Having carefully heard the respective points of view of the learned counsel for the parties as well as Mr. Mansoorul Arfin we are of the opinion that a finding is required on the following questions:---
(i) Whether B.P.R.D. Circulars have the force of law?
(ii) Whether the dates stipulated in these circulars are of the essence and a person not making payment within dates specified therein is entitled to avail the benefits provided thereunder?
(iii) What is the effect of the offer, dated 23-12-1997 from the appellant-Bank and its acceptance by the respondents?
(iv) What should the order be?
9. With respect to the first question Mr. Mansoorul Arfin learned amicus curiae drew our attention to section 33-B of the Banking Companies Ordinance, 1962, which was inserted in the above Ordinance through the Banking Companies (Amendment) Act, 1997, published on 2-6-1997. The above section reads as under:-- "33-B. Guidelines by the State Bank.---The State Bank may at any time either on the request of any one or more banking companies or the Federal Government or suo motu, lay down general guidelines for facilitating recovery of bad or doubtful loans, advances or finances by giving incentives to borrowers or customers to make repayment within a specified time frame by making adjustments or remissions in relation to interest or mark-up or part of the principal amount in cases in which all full recovery is not possible by reason of inadequacy of security or as part of a general scheme for the rehabilitation of sick units."
10. Learned counsel argued and rightly so, that Circular No,19, dated 5-6-1997 and all subsequent Circulars have been issued under authority conferred by statute and must, therefore, be treated as having the force of law. In this context learned counsel also referred to the judgment of the Honourable Supreme Court in Hashwani Hotels v. Federation of Pakistan and others, wherein similar Circulars have been held to have the force of law even without reference to the above-quoted section 33-B of the Banking Companies Ordinance.
11. Coming to the question of time being of the essence it may be pertinent to observe that the enabling statutory provisions i,e, the section 33-B expressly provide for laying down that general guideline for facilitating recovery of bad or doubtful loans, advances of finances by giving incentives to borrowers or customers to make repayments within a specified time frame (underlining ours). It is well-settled that while construing the provisions of delegated legislation, the scope of authority conferred upon the delegate by the parent statute, must always be kept in view.
Moreover, para.3 of Circular No,19, dated 5-6-1997, itself records that a onetime opportunity was being granted (defaulters) to voluntarily settle their pending obligations. We, therefore, find force in the contentions of Messrs Nafees Siddiqui and Mnsoorul Arfin to the effect that time for payment, was of the essence and find ourselves unable, with profound respect, to uphold the view that as a general rule the time limit could not be considered to be of the essence for the purpose of availing benefits under the schemes.
12. Mr. Kazim Hassan, learned counsel for the respondent, however, argued that even if it be assumed that initially the benefit of the incentive scheme could only be availed by those who made the requisite payment up to 5-12-1997, the fact remains that subsequently the State Bank itself issued various circulars in 1998 and 1999 granting further opportunity to defaulters and sick units to avail the incentives scheme. He referred to the proposal for settlement from the concerned branch of the appellant to the corporate branch indicating that the respondent's factory was a sick unit and also B.P.R.D. Circular No,26, dated 11-11-1998 stipulating that if such units had paid at least 10% of the agreed amount they were allowed to pay 40% up to 31-12-1998 and the remaining 50% up to 31-3-1999. Moreover, he urged that under the Circular No,19, dated 5-6-1997, as clarified in Circular No,32, dated 8-7-1997 a bank was required to execute an agreement with the borrower up to 5-9-1997 for enabling the latter to avail the incentive scheme. The respondent approached the bank before the aforesaid date i,e, on 27-8-1997. However, the latter, failed to refund even till 5-12- 1997, and made an offer only on 23-12-1997 which was accepted the very next day. The respondent made the entire payment before the time stipulated in the offer. In the circumstances it would be extremely unfair to deny the respondent the benefit of the incentive scheme on account of inaction on the part of the appellant.
13. In reply Mr. Nafees Siddiqui, however, argued that apart from the question of time of payment the offer made by the respondents on 27-8-1997 and the one made on behalf of the appellant on 23-12-1997, were contrary to the requirements of B.P.R.D., Circular No,36 of 1997 and as such, its acceptance by the respondent was inconsequential. Learned counsel contended without disputing the factum of repayment about Rs,18 million that in terms of the Circular in question the aforesaid amount could only be treated as payment towards interest and could not be deducted for the purpose of calculating the principal amount. He placed reliance upon the following provisions of the aforesaid Circular: "(b) Medium and Long Term Loans. ---Repayments made towards Terms Loa z both medium and long term, will also be treated as payment towards Interest/Mark-up unless the repayment schedule distinctly show the instalment amounts clearly in two separate portions that is Interest/Mark-up and principal and the repayments were made regularly as per schedule of repayment. In the absence of documented revised repayment schedule, the repayment if any made, shall remain as already treated as it should not be reversed to the disadvantage of the borrower."
14. Mr. Nafees Siddiqui argued that no payment having been made by the respondent up to 15th December, 1997 they could not in law claim the benefit of incentives under any of the above Circulars. Therefore, the offer, dated 23-12-1997, was clearly opposed to law and its acceptance by the respondent could not constitute a valid and binding contract. On the other hand Mr. Kazim Hassan contended that long before the offer and even prior to extension of the scheme, vide Circular No,57, dated 8-12-1997, the respondent had offered to settle their liabilities alongwith down payment of an amount of almost 50% of that due vide their letter, dated 27-8-1997. The appellant, however, refused to respond to the same and in any event when they made the offer on 23-12-1997, it was accepted by the respondent the very next day. As such the respondent could not be held guilty of not making any payment within the target date and consequently disentitle them to the benefits of the incentive scheme. Moreover, learned counsel argued that even after 8-12-1997, the benefit of the incentive scheme had been extended from time to time and it would be extremely unfair to deny the same to the respondent. Learned counsel referred to a subsequent Circular No,B.
P. R. D. , dated 5-11-1998.
15. Having given the matter our anxious consideration, while we are unable to uphold the view of the learned Single Judge to the effect that time for payment was not of the essence for the purposes of claiming benefit under the incentive scheme, we do find force in Mr. Kazim Hassan's contention raised in para.12 above. Mr. Nafees Siddiqui has not been able to deny that benefits under the scheme were also extended beyond 14-2-1998 i,e, the date on which the respondent had made payment of the amount then demanded by the appellant-bank. It is also admitted that in terms of B.P.R.D. Circular No,26, dated 11-11-1998 sick units who had paid 10% of the agreed amount were given a further chance to liquidate their liabilities up to 31-3-1999. Moreover, it would be unfair to deny the respondent the benefit of the scheme as long as they paid the entire amount claimed by the appellant.
16. The matter, however, does not end here. The contention of Mr. Nafees Siddiqui discussed in para.13 above, however, is far more formidable and Mr. Kazim Hassan was unable to furnish any satisfactory reply. He only stated that the amount deposited was in terms of the contract between the parties and the question whether the offer made by the officers of the appellant-bank was within the scope of their authority, was one relating to the indoor management of the appellant could not affect the respondent, who accepted the offer in good faith. We regret our inability to subscribe to this contention. It cannot be denied that the respondent was taking advantage of a particular scheme which had the force of law and not acting upon a mere private agreement between the parties as such they had to fulfil all the requirements of scheme and when the scheme itself required that the amount of Rs,18,736,909 repaid by the respondent could only be adjusted against interest/mark-up due no officer of the appellant-bank had the authority to deduct the same for the purpose of calculating the "principal". We had accordingly requested Mr. Nafees Siddiqui to get the amount payable by the respondent calculated after the grant of benefit of the incentive scheme to respondent. He placed before us a copy of a letter from the appellant, dated 25-4-2001 according to which such amount works out to Rs,22,923,502.21. Therefore, while keeping in view the arguments of Mr. Kazim Hassan referred to in para.12, coupled with the fact that the respondents have already withdrawn their appeal against the original decree, we are inclined to grant them the benefit of the incentive scheme, we still find ourselves unable to uphold the impugned order. Accordingly by a short order announced on 8-6-2001 we allowed his appeal, set aside the same and directed that the decree cannot be deemed to have been satisfied unless further payment of Rs,22,922,502.21 is made by the respondent. The execution application would consequently be treated as pending and the appellant would be entitled to prosecute the same before the learned Single Judge exercising Banking Court jurisdiction.
' The above are our reasons for the same.