ORDER SHEET

Order Sheet

IN THE HIGH COURT OF SINDH KARACHI

First Appeal No. 07 of 2016

Date	Order with signature of Judge

Hearing / priority :

1. For hearing of CMA No.2850/2017 :

2. For hearing of CMA No.504/2016 :

3. For hearing of Main Case :

14.12.2018 :

Mr. Nabeel Kolachi, advocate for the appellant.

Fawad Ijaz Khan (CNIC No.42301-6896791-1) for self

and on behalf of respondents 1 and 3.

…………

This appeal is directed against order dated 07.12.2015 passed by learned Banking Court No.V at Karachi in Suit No.31/2015. The impugned order was passed on a compromise application filed by the parties in the said Suit under Order XXIII Rule 3 CPC, whereby the above Suit filed by the appellant against the respondents was decreed on the terms and conditions stipulated in the said compromise application. Subsequently a decree was drawn in pursuance of the impugned order.

It is contended on behalf of the appellant that the main terms and conditions stipulated in the compromise application and recorded by the learned Banking Court, inter alia, were that respondents 1 to 3 were required to pay an amount of Rs.21,000,000.00 to the appellant as against their claim of Rs.38,426,554.00 in the Suit in terms of package letter No. HO/RMD/2343 dated 11.11.2015 and as per the schedule of payment stipulated therein ; and in case of default in any of the agreed installments, the appellant would have become entitled to initiate execution proceedings for recovery of the entire amount claimed in the Suit plus cost of funds thereon from the date of default till realization, however, after deducting the amount paid by respondents 1 to 3 to the appellant before or after signing the compromise. It is further contended that the amount of Rs.21,000,000.00 mentioned in the compromise application did not include cost of funds, and such concession was granted to respondents 1 to 3 on the condition that the said respondents shall pay the entire said amount to the appellant as per the schedule mentioned in the compromise application. It is also contended that since respondents 1 to 3 did not adhere to the terms and conditions of the compromise and committed breach thereof, the compromise / consent decree became ineffective entitling the appellant to initiate execution proceedings for recovery of the entire amount claimed in the Suit.

The grievance of the appellant is that in paragraph 3 of the impugned order the observation that cost of funds, cost of the Suit and cost of the Muqaddam will not be claimed from the defendants / respondents, is not in conformity with the terms and conditions of the compromise application as there was no such condition in the compromise application ; and, therefore, the learned Banking Court was not justified in making the above observation by imposing a condition that was never agreed by the parties. It is contended that in view of the default committed by respondents 1 to 3, the appellant is entitled to file execution proceedings in respect of the entire amount claimed in the Suit including cost of funds, but in view of the above observation, the appellant is unable to avail the above remedy provided by law. Learned counsel for the appellant requests that the above observation be set aside with direction to learned Banking Court to draw an amended decree strictly in terms of the compromise submitted by the parties.

Respondent No.2 Mr. Fawad Ijaz Khan, who is also representing respondents 1 and 3, denies the assertion made on behalf of the appellant that the said respondents have committed breach of the terms and conditions of the compromise. He submits that the said respondents have all along adhered to the terms and conditions of the compromise, and the appellant has made incorrect and contrary assertions only in order to frustrate the compromise.

We have examined the compromise application filed by the parties before the learned Banking Court and also the impugned order passed in pursuance thereof. It appears that the above observation was made on its own by the learned Banking Court as there was no stipulation in the compromise application that cost of funds, cost of the Suit and cost of the Muqaddam will not be claimed from the defendants / respondents. Since the Suit was decreed in terms of the compromise application with the consent of the parties and it was a consent decree, the above observation / condition, to which a financial institution is otherwise entitled in the normal course, was not justified, especially without consent of the parties. Accordingly, the above observation is hereby set aside by directing the learned Banking Court to draw an amended decree strictly in terms of the compromise agreed to by the parties.

The questions whether or not respondents 1 to 3 have committed any default and whether the appellant is entitled to initiate execution proceedings in respect of the entire amount claimed in the Suit, can be decided only by the learned executing Court and not by this Court. If execution proceedings are initiated by the appellant in respect of the entire claim in the Suit by claiming that respondents 1 to 3 have committed default, the said respondents will be at liberty to file objections in the execution proceedings to contest such claim of the appellant ; and, if any such objections are filed by the said respondents, the Banking Court shall decide the same strictly in accordance with law after providing opportunity of hearing to the parties.

The appeal and listed applications stand disposed of in terms of the above directions with no order as to costs.

J U D G E