Judgment Sheet
IN THE HIGH COURT OF SINDH AT KARACHI
High Court Appeal No. 151 of 2006
and
High Court Appeal No. 175 of 2006
Before :
Mr. Justice Nadeem Akhtar
Mr. Justice Sadiq Hussain Bhatti
Karachi Pipe Mills Limited, appellant No.1 in HCA No.151/2006
and respondent No.1 in HCA No.175/2006, and Muhammad Aslam,
Muhammad Ashfaq, Farooq Ahmed and Shakeel Ahmed,
appellants 2 to 5 in HCA No.151/2006, through Syed Zaki
Muhammad and Syed Wajahat Abbas Advocates.
United Bank Limited, appellant in HCA No.175/2006,
through Mr. Nabeel Kolachi Advocate.
Habib Bank Limited, respondent in HCA No.151/2006 and
respondent No.2 in HCA No.175/2006, through Mr. Hamza I. Ali
Advocate.
Dates of hearing : 09.09.2014, 22.12.2014, 05.03.2016, 12.03.2016
and 02.04.2016.
J U D G M E N T
NADEEM AKHTAR, J. – Both these appeals have been filed against the order passed by a learned Single Judge of this Court on 31.03.2006 (‘the impugned order’) in Execution Application No.68 of 1999, arising out of Banking Suit No.207 of 1998, which was decreed with costs in favour of respondent Habib Bank Limited (‘HBL’) jointly and severally against the appellants Karachi Pipe Mills Limited (‘KPML’) and 4 others in the sum of Rs.81,952,986.20 with markup thereon at the rate of 54 Paisas per thousand per day from the date of institution of the Suit (19.02.1998) till its payment for the running finance facility, and against the appellant KPML in relation to the PAD accounts in the sum of Rs.40,299,360.00 with markup at the rate of 54 Paisas per thousand per day from the date of institution of the Suit till payment. A decree for sale of immovable properties mortgaged by KPML was also passed in favour of HBL. Through the impugned order, the aforesaid execution application filed by respondent HBL has been disposed of by holding that markup is to be charged from the judgment debtors only up till 16.07.2002 ; since an amount of Rs.23,578,322.24 was in excess after satisfying the decree in favour of decree holder HBL, the claim of Rs.11,973,600.00 made by United Bank Limited (‘UBL’) was liable to be adjusted, though UBL filed application for ratable distribution after the assets of the judgment debtors were received by the executing Court ; after satisfying the decree of HBL and adjustment of the claim of UBL, judgment debtor KPML is entitled to the residual amount of Rs.11,604,722.24 out of the excess amount along with profit accrued thereon ; and, Suit No.528 of 2003 filed by KPML for determination of their liability, has become infructuous. Since the facts and the order impugned are common in these appeals, this common judgment shall dispose of both these appeals.
2. Being aggrieved by the impugned order, KPML has filed HCA No. 151/2006 against payment of markup to HBL beyond the date of the decree and till the date when the auction purchaser was required to deposit the entire sale proceeds in Court, and acceptance of the UBL’s claim and payment to UBL from the sale proceeds ; and, UBL has preferred HCA No.175/2006 mainly on the ground that markup has not been allowed / paid to UBL as per the decree passed in its favour by the Banking Court.
3. The relevant facts of the case are that the above mentioned Suit filed by respondent HBL was decreed in the terms noted above. Thereafter, HBL filed execution proceedings against KPML and others, wherein auction proceedings were held by the Official Assignee / receiver, and the entire assets of KPML were sold to the highest bidder for a total sum of Rs.252,500,000.00. On 24.03.2004, UBL filed CMA No.629/2004 under Order XXI Rule 46 CPC in the HBL’s execution proceedings seeking satisfaction of the decree passed in its (UBL’s) favour against KPML and others in Suit No.389/1998 by Banking Court No.I at Karachi. Admittedly, UBL had no charge on the immovable properties of KPML as the same were mortgaged exclusively with HBL. Therefore, ratable distribution was sought by UBL out of the sale proceeds of movable assets of judgment debtors for satisfaction of its decree.
4. Syed Zaki Muhammad, learned counsel for KPML and other judgment debtors, the appellants in HCA No.151/2006 and respondent No.1 in HCA No.175/2006, contended that markup in addition to the decretal amount from the date of filing of the Suit till recovery, being violative of BCD Circulars issued by the State Bank, could not be awarded to the decree holder HBL as markup was included in the decree ; and, the decree to the extent of further markup was nullity, and as such the learned executing Court erred in executing the same. Without prejudice to his above contention, he further contended that markup ought to have been charged only till 08.11.1999 when chowkidars were appointed by HBL in respect of the assets of KPML, or at the most till the year 2001 when the said assets were taken over by the Court. In this context, he placed reliance upon several citations. He submitted that HBL had claimed only an amount of Rs.153,270,140.00 in column 7-A of its execution application, therefore, no further or additional amount could be granted or paid to HBL. He further submitted that the State Bank of Pakistan had issued a show cause notice dated 19.01.2002 to KPML for payment of the decretal amount of Rs.122,252,346.00 to HBL, therefore, HBL was not entitled to receive any amount over and above the said amount.
5. The next contention of the learned counsel for KPML was that HBL purposely delayed the auction of the property in order to fetch maximum markup, and the auction purchaser did not deposit the sale proceeds in Court within the stipulated period. He submitted that due to these reasons, the judgment debtors were not liable to pay markup for such delayed period. He further submitted that in any event the judgment debtors were not liable to pay markup beyond the date when the auction purchaser was required to deposit the sale proceeds in Court. Regarding the claim for ratable distribution filed by UBL, he submitted that UBL had no locus standi to make such claim or to receive the same out of the sale proceeds of the mortgaged property as UBL was not a party or decree holder in the execution proceedings. It was contended that the application filed by UBL for ratable distribution was not maintainable as it was filed by UBL after the assets of KPML were received by the learned executing Court. In support of this submission, he relied upon Pakistan Industrial Credit and Investment Corporation Limited, Peshawar Cantt., and others V/S Government of Pakistan, 2002 SCMR 496. It was urged that in view of the above, HCA No.175/2006 filed by UBL is liable to be dismissed, and the entire amount received by UBL in pursuance of the impugned order is liable to be refunded to KPML along with markup. It was further urged that HBL is liable to return to KPML the entire amount of markup received by it illegally in pursuance of the impugned order. It was also urged that the impugned order is liable to be set aside in the above terms, and the sale proceeds of the mortgaged property be ordered to be redistributed in accordance with law.
6. Mr. Nabeel Kolachi, learned counsel for UBL, appellant in HCA No. 175/2006, contended that all relevant details of the claim submitted by UBL, including calculation of markup, were on record, but the same was erroneously calculated by the learned executing Court as markup has not been paid to UBL as per the decree passed in its favour by the Banking Court, which attained finality much before passing of the impugned order. He submitted that after allowing UBL’s application / claim, the decree passed in its favour ought to have been satisfied in letter and spirit by the learned executing Court by paying markup to UBL from the date of the decree till realization. He further submitted that no reason has been given in the impugned order for not allowing markup to UBL as per the decree, and on this ground alone, the appeal filed by UBL should be allowed. It was urged that in view of the error committed in the impugned order, UBL is entitled to the remaining amount of Rs.8,538,400.00 to satisfy the decree in its favour as per the calculation made in Ground ‘C’ of its appeal, in addition to the amount of Rs.11,973,600.00 received by UBL from the Official Assignee on 05.04.2006.
7. Mr. Hamza I. Ali, learned counsel for HBL, the respondent in HCA No. 151/2006 and respondent No.2 in HCA No.175/2006, contented that HBL was/is entitled to receive the amount as per the decree, which clearly provided payment of markup to HBL from the date of institution of the Suit till realization, and objection in this regard by the judgment debtors could not be made in the execution proceedings. Regarding the chowkidars appointed by HBL, he stated that they were appointed to guard the mortgaged assets as KPML had closed down its factory. He pointed out that the amount of Rs.153,270,140.00 was calculated and claimed by HBL in column 7-A of its execution application only up till the date of filing the same, and future markup till realization was specifically prayed for in the said column. Regarding the show cause notice issued by the State Bank of Pakistan in respect of Rs.122,252,346.00, he submitted that the same was not an order or decree of the Court nor could it override the decree passed in favour of HBL ; and, in any event this objection at this stage is untenable as the application filed in this behalf by KPML under Section 152 CPC was dismissed in the Suit on 05.11.2004 and the appeal filed by KPML against such dismissal was also dismissed.
8. By inviting our attention to Reference No.02/2005 dated 13.04.2005 filed by the Official Assignee in the execution proceedings, Mr. Hamza I. Ali stated that the correct and complete calculation of markup payable to HBL from the institution of the Suit till realization was made in the said reference by the Official Assignee in pursuance of the order passed by the learned executing Court. He contended that according to the said reference, an amount of Rs.94,059,873.84 was payable to HBL, but the learned Single Judge allowed payment of only Rs.75,651,537.76 to HBL. He submitted that the said reference was erroneously ignored by the learned Single Judge and instead of directing payment of markup to HBL from the date of institution of the Suit till realization as per the decree, it was ordered that markup should be paid to HBL up till 16.07.2002, being the date falling fifteen days after confirmation of sale in favour of the auction purchaser. Regarding the UBL’s claim, it was argued by the learned counsel that the application for ratable distribution filed by UBL was not maintainable as the same could be made only before receipt of money by the Court ; whereas, in the present case the money realized from sale was already in the custody of the Court when the application was filed by UBL. In support of this submission, he also placed reliance upon the case of Pakistan Industrial Credit and Investment Corporation Limited (supra) relied upon by the learned counsel for KPML. It was further argued by the learned counsel that the said application was not maintainable also on the ground that UBL had no locus standi to file the same as it was not a party either in the Suit or in execution proceedings. According to him, the only remedy for UBL was to file execution proceedings for execution and satisfaction of its decree.
9. It was further submitted by Mr. Hamza I. Ali that as distribution of the sale proceeds by the learned Single Judge amongst HBL, judgment debtors and UBL was arbitrary and erroneous, the sale proceeds may be ordered to be redistributed in accordance with law by allowing markup on the decretal amount to HBL as per the decree from institution of the Suit till realization. He submitted that despite the fact that HBL had not filed an appeal or objections under Order XLI Rule 21 CPC, this is a fit case in which powers under Order XLI Rule 33 CPC can be exercised by this Court to correct the errors in the impugned order and to do complete justice amongst the parties. In support of his last submission, the learned counsel relied upon (1) Messrs S.M. Yusuf & Bros. V/S Mirza Muhammad Mehdi Pooya and another, PLD 1965 S.C. 15, (2) Province of Punjab through Collector Bahawalpur and others V/S Col. Abdul Majeed and others, 1997 SCMR 1692, (3) Ghulam Hussain and another V/S Faiz Muhammad and 7 others, PLD 1991 S.C. 218, (4) Central Government of Pakistan and others V/S Suleman Khan and others, PLD 1992 S.C. 590, (5) WAPDA and another V/S Messrs Khanzada Muhammad Abdul Haque Khan Khattak and Company, PLD 1990 S.C. 359, (6) Province of West Pakistan through the Secretary, Revenue Department, Lahore and 2others V/S Associated Hotels of India Ltd., 1973 SCMR 367, (7) Court of Wards, Hyderabad V/S Mir Allahbachayo Khan and another, PLD 1964 (W.P.) Karachi 569, (8) Government of Sindh and others V/S Mst. Sirtaj Bibi and another, PLD 2001 Karachi 442, (9) Hamijan Bibi V/S Sheikh Darog Ali and others, PLD 1964 Dacca 119, (10) West Pakistan and another V/S Sir Nawab Mohammad Farid Khan, PLD 1960 (W.P.) Peshawar 111, and (11) Fateh Khan and others V/S Rab Nawaz Khan and others, 1990 CLC 257.
10. We have heard the learned counsel for the parties at length, and with their able assistance, have also carefully examined the material available on record, the case-law cited at the bar, the written synopsis submitted by the learned counsel for KPML and HBL, and especially the impugned order.
11. Perusal of the decree dated 29.12.1998 passed in favour of HBL shows that it clearly provided payment of markup on the decretal amount to HBL at specified rate from the date of the institution of the Suit (19.02.1998) till realization, which was permissible under the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act XV of 1997 prevailing at the relevant time, as rightly observed by the learned Single Judge in the impugned order. It is an admitted position that the appeals filed by KPML against the judgment and decree passed in the Suit in favour of HBL and the confirmation of sale of its assets in favour of the auction purchaser in the execution proceedings, were dismissed, and the orders of dismissal of its said appeals were maintained by the Hon’ble Supreme Court. Thus, the decree in favour of HBL and the sale of the assets of KPML in execution proceedings attained finality long ago. As such, KPML was/is not justified, either in the execution proceedings or before us, in challenging the grant of markup to HBL from the date of filing of the Suit till realization, or to raise objection regarding the alleged irregularities at the time of auction of its assets. In view of the above, the argument of the learned counsel for KPML that markup in the above terms could not be awarded to HBL or the decree to such extent could not be executed, has no force, and the cases relied upon by him in this context are of no help to him. It is well-settled that the executing Court is duty-bound to execute the decree in letter and spirit, and it cannot go behind the decree. Hence, the objections raised by KPML with regard to markup and sale of its assets, were rightly rejected by the learned execution Court.
12. We shall now discuss the claim / application for ratable distribution filed by UBL. Perusal of Section 73 CPC shows that in order to qualify for ratable distribution of the sale proceeds in execution proceedings amongst decree holders and to succeed in the application filed in this behalf, the applicant / decree holder must establish that (a) the assets are held by the Court, (b) all the decrees are money decrees, (c) the decrees are against the same judgment debtor(s), (d) the application for ratable distribution is made to the Court holding the assets, and (e) such application is made prior to receipt of the assets by the Court. It is to be noted that assets are deemed to be received by the Court when the entire purchase money is actually deposited in Court, and in case of auction of immovable property, the date of the receipt of the assets is the day on which the entire money is paid under Rule 85 of Order XXI CPC. In the present case, it is an admitted position that CMA No.629/2004 seeking ratable distribution was filed by UBL much after the date when the assets were held by the Court. We have observed that it was noted in the impugned order that the application was filed by UBL after the receipt of assets by the Court, and further that this would disentitle UBL to claim ratable distribution. In spite of this, ratable distribution was allowed in favour of UBL only on the ground that after satisfaction of the HBL’s decree, excess amount was available. It is important to note that no reason has been given in the impugned order for deviating from the mandatory provision of Section 73 ibid and granting such relief to UBL to which it was not entitled. In this context, we may refer to the case of Pakistan Industrial Credit and Investment Corporation Limited (supra) relied upon by the learned counsel for KPML and HBL, wherein the Hon’ble Supreme Court was pleased to hold that it is necessary for ratable distribution that the assets must be held by the Court, there should be more than one person who have money decrees in their favour against the same judgment debtor, and application should be made before the receipt of assets by the executing Court. With profound respect, the impugned order to the extent of grant of ratable distribution in favour of UBL, is against the express provision of Section 73 ibid and the law laid down by the Hon’ble Supreme Court.
13. We have examined Reference No.02/2005 dated 13.04.2005 filed by the Official Assignee as well as the order passed on 28.03.2005 in the execution proceedings in compliance of which the said reference was filed. In the said order, by observing that HBL had raised objection to the previous reference dated 03.03.2005 filed by the Official Assignee on the ground that markup was not taken into consideration therein as per the decree, Official Assignee was specifically directed by the learned executing Court to examine HBL’s objection as to calculation of markup. In compliance of this order, Reference No.02/2005 was submitted by Official Assignee disclosing the amount of the decree, rate and amounts of markup payable to HBL from the date of institution of the Suit (19.02.1998) till 09.02.2003, and the amounts paid to HBL ; and, after calculating the markup payable to HBL and the amounts received by HBL, it was stated therein that balance amount of Rs.94,059,873.84 was still payable to HBL as on 09.09.2003. We have noticed that though the above calculation was made in compliance of the Court’s order, yet the impugned order is completely silent about the above reference and the amount stated therein as payable to HBL. This clearly shows that the calculation regarding markup sought by the learned executing Court on the specific objection raised by HBL, was not considered at the time of passing the impugned order, and no reason whatsoever is stated therein for not considering or accepting such calculation. It was the statutory duty of the learned executing Court to execute the decree by ensuring that HBL receives markup as per the decree from the date of institution of the Suit till realization. By not doing so and by ordering that HBL was entitled to markup only till 16.07.2002 and not till realization, the learned executing Court, in our humble opinion, went behind the decree by modifying the terms thereof.
14. In order to consider the submission made by the learned counsel for HBL that this Court has ample power under Order XLI Rule 33 CPC to correct the above errors in the impugned order though no appeal or cross-objections were filed by HBL, we have examined the following cases cited by him on this point.
A. In Central Government of Pakistan (supra), it was held by the Hon’ble Supreme Court that it is well-settled that under Order XLI Rule 33 CPC the High Court can exercise the appellate powers in favour of all or any of the respondents or parties although such respondents or parties may not have filed any appeal or objection.
B. In Province of Punjab (supra), the Hon’ble Supreme Court was pleased to hold that the power conferred on the appellate Court under Order XLI Rule 33 CPC is not of the widest amplitude and in exercise of this power the appellate Court is competent to grant relief to a party notwithstanding the fact that such party failed to prefer an appeal or submit any cross-objection ; however, in granting relief in such cases, the appellate Court will be guided by the principles of equity, justice and good conscience, and the fact that withholding of relief would result in a contradictory, unworkable or impossible order / decree ; and, therefore, when the appellate Court reaches a conclusion in a case that by withholding the relief to a non-appealing respondent or to a respondent who omitted to file cross-objection, grave hardship or injustice is likely to result to it or that the judgment or orders will be rendered contradictory, it will be a good ground for exercise of power under Order XLI Rule 33 CPC to grant appropriate relief to a non-appealing respondent or to a respondent who omitted to file cross-objection in the appeal.
C. In Messrs S. M. Yusuf & Bros. (supra), it was held by the Hon’ble Supreme Court that the fact that the appeal is only against a part of the decree will not, by itself, restrict the appellate Court’s power ; and, under Rule 33 of Order XLI CPC, the High Court has ample power, in appeal, to provide the remedy against the person who was really liable, within the frame work of the entire proceeding.
D. In Province of West Pakistan (supra), it was held by the Hon’ble Supreme Court that by virtue of Order XLI Rule 33 CPC, an ordinary appellate Court has the power to pass any order that ought to have been passed even though the party in whose favour the Court passes it has not appealed.
E. In WAPDA and another (supra), the Hon’ble Supreme Court was pleased to hold that the appellate Court has ample powers under Order XLI Rule 33 CPC to pass any decree and make any order that ought to have been passed or made and to pass or make such further or other decree or order as the case may require, and this power could be exercised by the Court in favour of all or any of the respondents or parties, although such respondents or parties may not have filed any appeal or objection.
15. Coming back to the present case, we have already held that the learned execution Court was duty-bound to execute the decree by ensuring that HBL receives markup as per the decree from the date of institution of the Suit till realization, and by not doing so and by ordering that HBL was entitled to markup only till 16.07.2002 and not till realization, the learned executing Court went behind the decree by modifying the terms thereof. We have also held that ratable distribution ought not to have been allowed in favour of UBL. Therefore, in view of the well-settled law discussed above, this Court has power under Rule 33 of Order XXI CPC to make any order that ought to have been made and to make such further or other order as the circumstances of this case may require, and this power can be exercised in favour of HBL even though HBL did not file an appeal or cross-objections, and further to provide the remedy against the party that was really liable.
16. In view of the above discussion, HCA No.175 of 2006 filed by UBL is dismissed with no order as to costs, however, UBL may seek execution and satisfaction of its decree by filing execution proceedings against the judgment debtors ; and, HCA No.151 of 2006 filed by KPML is partly allowed. Resultantly, the impugned order is modified in the following terms :
A. Execution Application No.68 of 1999 filed by HBL stands revived.
B. Markup shall be paid to HBL from the date of institution of Suit No.207 of 1998 till realization strictly in terms of the decree passed in the said Suit.
C. All amounts received by UBL in pursuance of the impugned order passed in Execution Application No.68 of 1999 shall be returned by UBL by depositing the same with the Official Assignee on or before 30.06.2016.
D. After payment of all amounts to HBL as per the decree, the remaining / excess amount shall be released in favour of the judgment debtors.
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J U D G E