ANWAR ZAHEER JAMALI, J.--- This is an application under Sections 94, 151, C.P.C. Read with Order XXXIX, Rules 1 and 2, C.P.C. Moved by the plaintiff with the following prayers:-- "(a) To forthwith provide working capital of Rs. 40.00 million to the applicant or otherwise to issue its NOC for another bank/financial institution to extend the said facility to the applicant against pani passu security of its assets;
(b) To provide reasonable cushion period to any incoming working capital creditor of the applicant so that the applicant may commence its commercial operation;
(c) Pending the provision of the foregoing relief to maintain status quo with respect to mutual right and obligations;
(d) It is also prayed that any other relief, which this Hon'ble Court may deem fit and appropriate in the circumstances of the case, may also kindly be granted."
2. Relevant facts of the plaintiffs .Case are that on 23.5.2002 they filed a suit for specific relief and recovery of damages against the defendants. In the plaint they stated that during the proceedings in J.M.A. No. 41/1998, after negotiations with defendant No. 1 and upon their assurance of relief and support for short term and long term funding, at the highest bid of Rs. 100.00 million M/s. Husnain Construction Company (Pvt.) Limited opted to purchase M/s. Sadiqabad Textile Mills Ltd. From defendant No. 2. Subsequently a new company M/s. A.M. Fabrics (Pvt.) Ltd. (plaintiff) was incorporated to assume the rights and obligations of the project purchased through defendant No. 2 and such approval was obtained from the Hon'ble Court and possession of project was also handed over.
3. After incurring some other expenditures for restoration of utility services, in order to arrange finance to make this project operational, plaintiff made an application dated 3.7.2001 to defendant.
No. 1 for providing Running Finance Facility of Rs. 40 million. The defendant No. 1 after satisfying itself with the technical soundness of the project and credit worthiness of the plaintiff on 19.7.2001 finally sanctioned the Running Finance Facility Limit in the sum of Rs. 40 million in favour of the plaintiff for purchase of raw material or cotton for manufacture of yarn. This sanction letter was accepted and signed by the plaintiff and necessary documents to secure such finance were executed. In pursuance of such Running Finance Facility an irrevocable Letter of Credit was established by defendant No. 1 in favour of M/s. Marketing Services INC, USA for import of raw cotton by the plaintiff for which all expenses were borne by the plaintiff. However, the USA supplier failed to perform its delivery obligation under the L/C which expired on 15.10.2001, resultantly the plaintiff had to pay L/C cancellation expenses in the sum of Rs. 2,127,840/- to the defendant No. 1. The plaintiff thereafter applied for disbursement of the sanctioned Running Finance Facility for purchase of cotton in Pakistan to which defendant No. 1 showed their inability without any sufficient cause. Further case of the plaintiff is that defendant No. 1 is bound to honour its contractual obligation of providing agreed Running Finance and their default in fulfilling such obligation has caused financial losses to the plaintiff in the sum of Rs. 58,624,518/-.. In the prayer clause plaintiff prayed for decree in the aforesaid sum with mark-up and also direction to defendant No. 1 to forthwith provide the contracted Running Finance Facility to them.
4. During the pendency of suit, on the basis above assertions and also assertions made by the defendant No. 1 in their application under Section 10 of Ordinance XLVI of 2001, the plaintiff addressed a letter to the Managing Director of defendant No. 1 on 26.9.2002, wherein as an alternate they requested them for grant of NOC for creating pari passu charge in favour of other bank/financial institution willing to provide them required finance.
5. When the above fact with reference to letter dated 26.9.2002 came to the notice of this Court, following order was passed in the matter on 1.10.2002:- "Learned counsel for plaintiff has placed on record a letter dated 26.9.2002 seeking no objection from the defendant No. 1 to obtain Running Finance Facility from some other resources.
Perusal of case record reveals that the defendant No. 1 had agreed to extend further financial facilities to the plaintiff but same were not supplied to them. Mr. Salman Hamid submits that the finance facility agreed between the plaintiff and defendant No. 1 was subject to availability of funds which were not available with defendant No. 1 the relevant time.
I am not satisfied with the submission made by the learned counsel for defendant No. 1. Let some responsible officer of defendant No. 1 appear in Court on the next date of hearing to submit reply of letter dated 26.9.2002 submitted by the plaintiff and also to explain about the existing position of availability of funds with defendant No. 1.
Adjourned to 3.10.2002."
6. In response to the above order and further order dated 3.10.2002 a statement was submitted in Court on behalf of defendant No. 1 on 8.10.2002, wherein they gave their reasons for not disbursing the sanctioned Running Finance Facility of Rs. 40.00 million to the plaintiff. However, they chose to remain silent regarding the request of plaintiff to issue NOC for creating pari passu charge.
7. In the above background of proceedings in the suit on 16.12.2002 plaintiff moved the listed application for grant of interim reliefs as reproduced above.
8. Mr. Umar A. Bandial, learned counsel for the plaintiff, giving the background of this litigation submitted that when Sadiqabad Textile Mills Ltd. Was offered for auction through Official Assignee of Karachi in J.M.A. No. 41 of 1998 the maximum bid received was Rs. 60.00 million only. In the meantime, on the assurance of defendant No. 1, for providing capital and other support for revival of this industry, plaintiff company offered Rs. 100.00 million for purchase of this sick unit, which arrangement was approved by the defendants and Court, whereafter on completion of all legal formalities possession was handed over on 1.7.2000. The plaintiff paid Rs. 25.00 million as down payment, Rs. 5,185.00 million towards WAPDA and PTCL charges and thereafter they also paid first instalment of Rs. 11.519 million on 31.12.2001 to the defendant No. 1 thereby reducing the outstanding principal amount to Rs. 62,832 million. For this remaining liability defendant are retaining securities valuing Rs. 325.00 million comprising land, buildings and revived plant amount to Rs. 300.00 million and additional collateral security valuing Rs. 25.00 million. In addition to this plaintiff further invested an amount of Rs. 70.00 million for the revival and modernization of plant and machinery and it was at that stage when project became operational that the defendant IDBP sanctioned running finance of Rs. 40.00 million to the plaintiff on 19.7.2001. He further contended that without any fault from the plaintiff side vide letter dated 26.10.2001, defendant No. 1 without assigning any reason expressed their inability to disburse running finance for the time being and it is under these circumstances that the plaintiff have been forced to go into litigation against them. Referring to the proceedings of the present suit he contended that the mala fide and dishonest conduct of the defendant is exposed from the inconsistent stand taken by them in their leave to defend application and its supporting affidavit wherein they had stated that it is the plaintiff who has not applied for NOC to create pari passu charge. Further referring to the plaintiff's letter dated 26.9.2002 and the two orders dated 1.10.2002 and 3.10.2002 he contended that despite specific directions of this Court defendant No. 1 did not come toward with any clear statement but had given lame excuses in their statements dated 7.10.2002 for not fulfilling their contractual obligation of disbursing the sanctioned running finance of Rs. 40.00 million. He urged that in such circumstances, in exercise of its powers under Sections 94 and 151, C.P.C., this Court is empowered to grant necessary interim relief prayed for in the listed application. In support of his contentions learned counsel placed reliance on the following cases:--
(1) Emam Textile Mills Ltd. Vs. IDBP (1999 C.L.C. 1630).
(2) Rehman's Feeds (Pvt.) Ltd. Vs. ADBP (2001 YLR 2240).
(3) Official Assignee Vs. Liyds Bank Ltd. (P.L.D. 1969 S.C. 301).
(4) Hafeez Ullah Vs. Barkat A.I (P.L.D. 1998 Karachi 274).
(5) Zasha Vs. ADBP (P.L.D. 1993 Lahore 914).
(6) Waqar Hussain Vs. National Refinery Ltd. (1993 C.L.C. 2497).
(7) Haft Adam A.I Vs. Asif Hussain (1996 M.L.D. 322).
(8) Agha Saifuddin Vs. Pak Suzuki Motors (1997 C.L.C. 302).
(9) Salina Javed Vs. S.M. Arshad (P.L.D. 1983 Karachi 303).
(10) Balgamwala Vs. Shakarachi Trading (P.L.D. 1990 Kar. 1).
9. A review of above cases show that in the first case when it was found by the Court that IDBP has withdrawn its facility from the borrower without any justification which has resulted in causing prejudice to them the agreement of finance was revived between the parties and IDBP was made liable to arrange delivery of contracted machinery to the plaintiff, for which it was made to pay any difference or increase in the price. In the second case the Court was pleased to decree a suit, directing the Bank to perform its obligation of providing additional finance to the borrower in order to get the imported machinery released from customs authorities. In the third case it was observed by the Supreme Court that the rule of equity which applies as between two innocent persons is that one who could present the loss must suffer and not the other who was powerless to do so. In the fourth case a Division Bench of this Court learned in favour of enforcing contractual obligations by refusing to allow unilateral or wilful disclaimer through the grant of interim relief and interim relief was allowed to safeguard the contractual rights. In the fifth case in order to prevent injustice and injury to the innocent party, High Court in exercise of it Constitutional jurisdiction directed the respondent to perform its contractual obligations and to establish the Letter of Credit contracted with the borrower. In the sixth case while granting interim relief rule of enforcement of contractual obligation was followed by the Court. In the seventh case this Court upheld the principle that a party in breach of contract cannot be permitted to take advantage of its on wrong or to below hot and cold at the same time. In the eighth case mandatory injunction was granted at the interim stage on the application under Section 94. Section 151 and Order 39, Rule 10, C.P.C. Directing the defendant to supply vehicle, so as to avoid breach of its contractual obligation. In the two cases at serial Nos. Nine and ten Courts held that jurisdiction of the Court was meant to foster the cause of justice, therefore, technical impediments had to be overcome and disregarded to ensure grant of effective relief to the aggrieved party.
10. Lastly, Mr. Bandial urged that in case the interim reliefs prayed in the listed application are not granted to the plaintiff their all efforts for revival of project will be frustrated and they will be financially ruined.
11. Conversely, Mr. Salman Hamid contended that from the statement dated 7.10.2002 submitted before this Court it is evident that for valid reasons defendant No. 1 bank are unable to release finance as per their earlier commitment with the plaintiff. Referring to the proceedings in J.M.A. No. 41 of 1998 learned counsel urged that the plaintiff are defaulters in the payment of agreed sums as per settlement between the parties in respect of purchase of Sadiqabad Textile Mills Ltd. Thus balance of convenience does not lie in their favour for grant of any interim relief. Dilating upon the scope of Section 94(e), C.P.C. He contended that in the instant case it will neither be "just" nor "convenient" that interim relief be allowed to the plaintiff, which is a condition precedent for exercise of powers by this Court under the aforesaid provision of law. He lastly urged that approved terms for running finance did not contain any condition for the creation of pari passu charge on Sadiqabad Textile Mills, which is still not owned by plaintiff, or for grant of NOC in that context by the defendant No. 1 thus the reliefs claimed by the plaintiff are beyond the contractual obligations between the parties. He, therefore, prayed for dismissal of listed application.
12. In reply to the above, Mr. Umar Bandial contended that the dispute between the parties relating to the proceedings in J.M.A. No. 41 of 1998 has no nexus to the dispute involved in the present proceedings, but the defendant No. 1 are trying to unnecessarily confuse these two issues so as to avoid fulfilling their commitment of providing running finance facility of Rs. 40.00 million to the plaintiff. He urged that for grant of this facility separate and independent arrangements were made between the parties to the satisfaction of defendant No. 1, thus they are estopped from resiling from such commitment. With reference to the statement dated 7.10.2002, he submitted that not a single ground urged in the statement is such which may justify withholding of running finance facility to plaintiff as all these grounds were available to the defendant No. 1 even at the time of sanctioning running finance facility in favour of plaintiff. He further added that in case the defendant have any financial constraints in fulfilling their commitment then they can demonstrate their bona fides by conceding for grant of NOC in favour of plaintiff for creating pari passu charge on the existing assets of the plaintiff available with the defendant No. 1, which are almost five times in value to the total outstanding liabilities of plaintiff.
13. I have carefully considered the arguments advanced by the learned counsel and perused the case record.
14. Without going into further details of the controversy, for the purpose of disposal of listed application it would suffice to observe that on the basis of admitted facts that the defendant No. 1 had sanctioned finance facility in the sum of Rs. 40 million in favour of plaintiff and thereafter without assigning any cogent reason declined to release such facility in their favour and further in their application under Section 10 of Ordinance XLVI of 2001, unfairly, they had tried to shift the responsibility in this context on the plaintiff, which fact is belied and exposed from further proceedings in the matter, I am satisfied that the plaintiff have prima facie succeeded to show that the defendant No. I have acted unjustly and in an arbitrary manner by withholding payment of sanctioned finance facility, which is urgently required by the plaintiff for revival of their industrial project.
15. As is evident from case record sanctioning of further finance facility of Rs. 40 million in favour of plaintiff is by itself a proof of the fact that the defendant No. 1 were satisfied with the financial arrangements of the plaintiff and the securities furnished by them. In such circumstances, unilateral action of defendant No. 1 resiling from their contractual obligation without any just cause cannot be approved by the Court. The ratio of cases referred by Mr. Umer Bandial also strengthens the case of the plaintiff for exercise of powers under Sections 94 and 151, C.P.C. By Court in such situation to prevent injustice with the plaintiff.
On the principle of equity also defendant No. 1 cannot be allowed to take advantage of their on wrong and to cause harm to the interest of the plaintiff due to their indifferent attitude, which is apparent from the case record. It will not be out of place to mention here that defendant No. 1 in their statement dated 7.10.2002, filed in response to directions of this Court contained in its order dated 1.10.2002, has not assigned any reason which was not available to them at the time of extending sanction for Running Finance of Rs. 40 million in favour of plaintiff vide letter dated 19.7.2001. Even in their application C.M.A. No. 5980/2001 the defendant No. 1 have not come forward with any plausible justification for not providing Running Finance to the plaintiff as per their commitment though considerable period has passed, but have tried to shift responsibility on the plaintiff. It seems that the conduct of defendant No.1 has prima facie caused substantial prejudice to the interest of the plaintiff and in such circumstances. If some immediate interim arrangement is not made the plaintiff are likely to suffer an irreparable loss and injury.
16. The contention of Mr. Salman Hamid that request for grant of NOC to create pari passu charge is beyond the scope and terms of Running Finance Facility sanctioned in favour of plaintiff has no force as the alternate request of NOC for creating pari passu charge has been made by the plaintiff, in an attempt to salvage their project from disaster in an unforeseen situation created by the defendant No. 1. The defendant No. 1, therefore, cannot claim benefit of their on wrong on such pretext. The other contention of learned counsel to justify refusal of NOC on the basis of ownership of M/s. Sadiqabad Textile Mills Ltd. Has also no force as apart from other material on record, from the report/reference of respondent No. 2 in J.M.A. 41/1998, dated 28.5.2001 it is evident that besides all assets consisting land, building and revived plant/machinery of Sadiqabad Textile Mills Ltd.
Other properties of plaintiff are also encumbered with defendant No. 1 for the purpose of collateral securities. Further defendant No. 1 have not specifically denied the subsequent investment made by the plaintiff in the project and the fact that existing assets/securities of the plaintiff are much higher in value than their outstanding liabilities.
17. From the above discussion it is evident that not only it will be just and convenient but also expedient in the interest of justice that this Court may pass an interim order, restraining the defendant No. 1 from committing breach of their contractual obligation by not providing Running Finance Facility to the plaintiff in terms of their letter dated 19.7.2001, or to make an alternate arrangement to redress the grievances of the plaintiff which are of urgent nature.
18. For the foregoing reasons listed application is disposed of in the following terms:- "The defendant No. 1 shall release sanctioned finance facility of Rs. 40 million to the plaintiff within 30 days from the date of this order or in the alternative issue No Objection Certificate for another bank/financial institution to extend finance facility upto Rs'. 40.00 million to the plaintiff against pari passu security of their assets."