ANWAR ZAHEER JAMALI, J.- This appeal under Section 22 of the Financial Institution (Recovery of Finances) Ordinance, 2001, has been preferred by the appellants against the order dated 15.6.2002, passed by Banking Court No. 1, Karachi, in execution application No. 134 of 2O0O, whereby cheque No. 742735 in the sum of Rs. 36,37,186.00 received from the Nazir office of this Court by the Banking Court on 30.5.2002 was ordered to be released/paid to the decree-holder/respondent No. 2 and objections of appellant No. 2 and intervenor, Ahmed Shujja Pasha, in this regard were rejected.
1. Briefly stated, facts relevant for the disposal of this appeal are that a suit for recovery of Rs.
54,81,757/-, being Suit No. 209 of 1997, filed by respondent No. 2, M/s. Habib Bank Ltd., against four defendants, including appellant No. 1, and respondent No. 1 was decreed in the sum of Rs.
44,68,131/- with costs and mark-up by judgment dated 13.12.1997, and such decree was prepared on 6.1.1998. Respondent No. 2, for satisfaction of decree passed in the above suit filed execution application No. 134 of 2000. During the pendency of this execution application respondent No. 1 moved an application before the Banking Court for calling the payment of cheque issued in the name of appellant No. 1 by this Court in execution application No. 12 of 1994. On such move, at one stage, payment of cheque issued n the name of appellant No. 1 was stopped under Court's order and thereafter it was never encashed. Later on when such application was allowed by the Banking Court, another cheque No. 742735, dated 28.5.2002 in the sum of Rs. 36,37,186.00 was sent by the Nazir of this Court to the Banking Court No. 1, Karachi. At this stage, appellant No. 2 M/s. Dolphin Auto Industries, a partnership firm, moved an application under Section 19(7) of the Financial Institution (Recovery of Finances) Ordinance, 2001 (in short "Ordinance of 2001") read with Order 21, Rule 58, C.P.C, before the Banking Court No. 1. The case of appellant No. 2 in their application was that the appellant No. 2 which had filed Suit No. 96 of 1992 was a partnership firm having 10 percent shares of appellant No. 1 and 90 percent shares of other partner/intervenor, Ahmed Shuja Pasha, therefore, the cheque in the sum of Rs. 36,37,186.00 issued in the name of Choudary Muhammad Ashraf during the execution proceedings of decree passed in Suit No. 96 of 1992, was for the benefit of both partners and was not liable to be attached or paid to decree-holder Bank/respondent No. 2 towards partial satisfaction of decree passed in Suit No. 209 of 1997. To this application objections were filed by respondent No. 1 and respondent No. 2 on 15.6.2002, who disputed such assertions.
Learned Banking Court while passing the impugned order came to the conclusion that though Suit No. 96 of 1992 was filed by appellant No. 1 and intervenor, Ahmed Shuja Pasha, being two partners of the firm Dolphin Auto Industries, but as the earlier cheque was issued in the exclusive name of Ch. Muhammad Ashraf, one of the judgment-debtors in execution application No. 134 of 2000, therefore, the decree-holder was entitled for encashment and release of such payment towards satisfaction of decretal amount. The learned Banking Court further held that it cannot hold inquiry under Order 21, Rule 58 as to whether appellant No. 1 was only entitled for 10 percent amount and rest would go to other partner of the firm, It was for these reasons that by impugned order Banking Court ordered that the payment of cheque in the sum of Rs. 36,37,186.00 received from the High Court be released in favour of the decree-holder/respondent No. 2.
2. It will be pertinent to mention here that initially this appeal was preferred by two appellants viz. Ch. Muhammad Ashraf and M/s. Dolphin Auto Industries a partnership firm. However, subsequently when this fact came to the knowledge of this Court that appellant No. 2 was not a registered partnership firm then the name of appellant No. 2, in terms of order dated 3.9.2002, was deleted from the array of the appellants as counsel for the appellants failed to show that how appeal on their behalf was maintainable.
3. We have heard Mr. Shafi Muhammadi, Advocate for the appellant. Without disputing the liability of appellant No. 1 as guarantor in respect of decree passed in Suit No. 209 of 1994, precisely, the only point urged by him is that one a plea was raised that Ch. Muhammad Ashraf was only entitled for 10 percent of the decretal amount in Suit No. 96 of 1992 and 90 percent was the share of other partner/intervenor, Ahmed Shuja Pasha, and such plea was also prima facie established from the contents of plaint in Suit No. 96 of 1992 and other material relating to that suit placed on record, then the Banking Court, before passing the impugned order, as per the spirit of Section 19(7) of Ordinance of 2001 and Order 21, Rule 58, C.P.C, was bound to examine this aspect by holding proper enquiry, which exercise was not undertaken by it, therefore, the impugned order is liable to be set aside.
4. Mr. Hamid Ali Shah, learned counsel for the respondent No. 1 in his arguments challenged the maintainability of the application and this appeal on the ground that the application under Order 21, Rule 58, C.P.C, moved before the Banking Court was only moved by appellant No. 2 viz. Dolphin Auto Industries, an unregistered firm, therefore, the said application was not maintainable in law and further after deletion of name of appellant No. 2 from the array of appellants, this appeal on behalf of Ch. Muhammad Ashraf, appellant No. 1, is also not maintainable in law. Learned counsel further contended that the order of attachment of cheque was passed by the Banking Court on 10.4.2001 while application in the nature of objections to such attachment was submitted by appellant No. 2 on 14.6.2002 i.e. After more than one year, therefore, application under Order 21, Rule 58, C.P.C, was also time- barred. Referring to the impugned order learned counsel contended that the procedure of inquiry on such applications/objections prescribed under the Ordinance of 2001 is summary in nature, therefore, the Banking Court while passing the impugned order rightly declined to hold inquiry relating to irrelevant objections raised by appellant No. 1 and intervenor, Ahmed Shuja Pasha. Learned counsel also contended that if there is any dispute as regards to alleged share of the two partners of the firm Dolphin Auto Industries then such controversy cannot be inquired into and decided by the Banking Court within the ambit of Order 21, Rule 58, C.P.C., but the other partner of the firm. Ahmed Shuja Pasha, can proceed to establish his claim against the judgment-debtor, Ch. Muhammad Ashraf, by filing a separate suit or by any other mode he can enforce and recover his alleged claim from him. Learned counsel lastly contended that the cheque attached by the Banking Court was in the exclusive name of Mr. Ch. Muhammad Ashraf and was deposited in his account and these facts were sufficient for the Banking Court to order release of such sum in favour of respondent No. 2.
5. Mr. Tasawar Ali Hashmi, Advocate for respondent No. 2, in his brief submissions urged that liability of borrower/principal and guarantor are coextensive and further under Section 128 of the Contract Act the creditor can proceed against the surety and it is not necessary that he shall first proceed against the principal/debtor. To fortify his submissions he placed reliance upon PLD 1982 Karachi 577 and PLD 1999 Karachi 196. He, therefore, supported the impugned order and urged that this appeal is liable to be dismissed.
6. Mr. Gohar Iqbal, Advocate for Intervenor, Ahmed Shujja Pasha, in C.M.A. No. 1189 of 2002, contended that by the impugned order a separate application moved by intervenor, was also disposed of by the Banking Court in a slipshod manner without considering the crux of the matter and deciding the claim of intervenor, Ahmed Shuja Pasha, therefore, the impugned order is liable to be set aside.
7. Mr. Shaft Muhammadi in reply to the submissions of M/s. Hamid Ali Shah and Tasawar Ali Hashmi for respondents Nos. 1 and 2, did not dispute that the liability of principal and guarantor is coextensive, thus, before the Banking Court there was no legal impediment in enforcing recovery against the appellant No. 1 in the capacity of guarantor before having recourse to recovery from respondent No. 1 from his mortgaged properties with respondent No. 2. However, as regards to other legal pleas he contended that even after deletion of name of appellant No. 2 this appeal, on behalf of appellant Ch. Muhammad Ashraf, is maintainable in law as he is one of the persons aggrieved with the impugned order. Mr. Shafi Muhammadi further contended that under Section 19(7) of the Ordinance of 2001 no period of limitation is prescribed for challenging the order of attachment thus the application moved by appellant No. 2 was maintainable in law. In the alternative learned counsel contended that a separate application moved by intervenor Ahmed Shuja Pasha, was also of the similar nature, thus, even otherwise the Banking Court was bound to hold enquiry about the claim of intervenor, before releasing the payment of cheque in favour of respondent No. 2.
8. We have carefully considered the arguments advanced by the learned counsel and perused the material placed on record. Before we proceed to examine merits of the impugned order, which have been seriously questioned by appellant Chaoudry Muhammad Ashraf and intervenor, Ahmed Shuja Pasha, it would be useful to examine various legal objections raised by respondents Nos. 1 and 2 as to the maintainability of this appeal and the application under Section 19(7) of the Ordinance of 2001 read with Order 21, Rule 58, C.P.C, moved by appellant No. 2 before the Banking Court. The objection as to the maintainability of this appeal after deletion of name of appellant No. 2 from the array of appellants is not sustainable for the reason that appellant No. 1 is an aggrieved person in respect of impugned order, therefore, in view of the rule laid down in the case of H.M.
Saya & Co., Karachi Vs. Wazir Ali Industries Ltd., Karachi (PLD 1969 S.C. 65), he can maintain this appeal independently. The other objection as to the maintainability of the application of appellant No. 2 before the Banking Court with reference to the period of limitation prescribed under Order 21, Rule 58, C.P.C, is also not tenable as under Section 19(7) of the Ordinance of 2001 no period of limitation has been prescribed for this purpose. The objection as to the status of appellant No. 2 for moving such application before Banking Court, being unregistered partnership firm has also little force as similar objections, as raised by appellant No. 2 in their application under Section 19(7) of Ordinance of 2001 were also raised before the Banking Court by intervenor Ahmed Shuja Pasha, who had moved a separate application for this purpose, thus, even if the application moved on behalf of appellant No. 2 was not maintainable, the Banking Court was bound to examine the merits of such pleas on the basis of other application moved by intervenor Ahmed Shuja Pasha.
9. As regards to the factual controversy, we find much substance in the arguments of Mr. Shafi Muhammadi and Mr. Gohar Iqbal that the cheque earlier issued in the name of appellant No. 1, which could not be encashed due to stop payment under Courts order, was issued towards satisfaction of decree passed in Suit No. 96 of 1992, which suit was instituted by appellant No. 1 and intervenor Ahmed Shuja Pasha, jointly as two partners of firm Dolphin Auto ' Industries, In such circumstances, the decretal amount to be paid during the proceedings of Execution Application No. 12 of 1994, was presumed to be for the benefit of both the plaintiffs in that suit according to their respective share, therefore, it was incumbent upon the Banking Court to have first decided the question as to whether the other cheque of Rs. 36,37,186.00 issued by the Nazir of this Court in favour of Nazir of Banking Court No. 1 in respect of the same amount was for the exclusive benefit of Chaudhry Muhammad Ashraf or Ahmed Shuja Pasha, being other plaintiff in Suit No. 96 of 1992 was also entitled for some share in the said amount, In our view mere issuance of earlier cheque in the exclusive name of appellant No. 1, which was admittedly not encashed, was not sufficient proof of the fact that only appellant No. 1 was entitled for payment of such decretal amount or that intervenor Ahmed Shuja Pasha had no claim in it. To say the least, when admittedly J.M. 18 of 2001 filed by respondent No. 1 was dismissed and there was no order of High Court on merits directing payment of Rs. 36,37,186.00 to the respondent No. 2 and such sum was being paid to the respondent No. 2 under the orders of Banking Court, it was necessary that before releasing such payment an enquiry should have been held to decide the claim of intervenor who, on one hand was not a judgment-debtor before the Banking Court and on the other hand had some prima facie interest in the decree passed in Suit No. 96 of 1992, being one of the plaintiff in that suit. The view taken by the Banking Court in its impugned order that no enquiry was required to be held by it in this regard not only demonstrates patent illegality but also denial of fair and proper opportunity of hearing to the intervenor. For these shortcomings and legal lacunas impugned order cannot be sustained.
10. Mr. Shafi Muhammadi during the course of his arguments categorically stated that at this stage when after passing of impugned order, as per the statement of respondent No. 2, payment of cheque has been released in their favour, appellant No. 1 or intervenor, Ahmed Shuja Pasha, are not keen for an order for refund of this amount from respondent No. 2, but at least a proper inquiry in this regard should be conducted by the Banking Court and further proceedings shall follow accordingly and till such time the mortgage properties of judgment-debtor/respondent No. 1, Dr. Arshad Malik, shall not be released, as there is ample material on record to show that now the respondents Nos. 1 and 2 are in collusion with each other and there is every possibility that under the cover of payment of decretal amount through cheque issued from its execution application No. 12 of 1994 the respondent No. 1 may succeed to get his mortgaged properties released from respondent .No. 2 Bank and in that situation if upon due inquiry finally the Banking Court comes to the conclusion that only the share of appellant No. 1, from the sum mentioned in cheque No. 742735 was liable to be adjusted towards satisfaction of decree passed in Suit No. 209 of 1997 and remaining sum was to be paid/refunded to the intervenor Ahmed Shuja Pasha, then nothing will be left with respondent No. 2 to recover the remaining decretal amount from respondent No. 1.
11. For the foregoing reasons we are inclined to dispose of this appeal in the terms that Banking Court No. 1, Karachi, shall, within 60 days of the receipt of this order hold proper inquiry with regard to the claim made by intervenor Ahmed Shuja Pasha, in his application before it and other application under Section 19(7) of Ordinance of 2001 and decide the same accordingly. Till such inquiry is held and the application moved by intervenor is disposed of, the payment of cheque released in favour of decree- holder/respondent No. 2 shall remain with them invested in some profit bearing scheme at their Bank for the benefit of succeeding party and further the documents regarding the mortgaged properties of respondent No. 1 available with respondent No. 2 shall not be released/discharged/redeemed till any further order in this regard is passed by the Banking Court No. 1, Karachi.