P L D 1996 Lahore 672
Before Khalil‑ur‑Rehman Khan, C.J.,
Tanvir Ahmad Khan and Malik Muhammad Qayyum, JJ
Messrs CHENAB CEMENT PRODUCT (PVT.) LTD.
and others ‑‑‑ Petitioners
BANKING TRIBUNAL, LAHORE and others ‑‑‑ Respondents
Writ Petition No. 1187 of 1993, decided on 2 1st July, 1996.
Raja Muhammad Akram for Petitioners
Qazi Muhammad Jamil, Attorney‑General for Pakistan on 11‑7‑1996, Faqir Muhamamd Khokhar, Deputy Attorney‑General and Shazeb Masud for Respondent No. 1.
Zahid Malik for Respondent No.2.
Dates of hearing: 26th, June; 2nd, 3rd, 4th, 8th, 9th and Ith July 1996
KHALIL‑UR‑REHMAN. KHAN, C.J.‑‑‑The questions referred to the Full Bench arise in 607 petitions. The detail of which is mentioned in Schedule annexed to this judgment. These questions read as follows:
(i) Whether a petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, is maintainable during the pendency of proceedings before the Banking Tribunal constituted under the Banking Tribunals Ordinance, 1984, if so on what grounds?
(ii) Whether the judgment and decree of the Banking Tribunal can be assailed by filing a Constitutional petition notwithstanding that it is appealable before this Court under section 9 of the Banking Tribunals Ordinance, 1984?
(iii) Whether sections 6 and 9 of the Banking Tribunals Ordinance, 1.984 are discriminatory and ultra vires the Constitution?
2. The Constitution petitions out of which these questions have arisen may be categorised as under:‑‑
(a) The Banking Tribunals on filing of the suits for recovery have taken cognizance of the suits. The proceedings are still pending, vires of the Ordinance and various provisions thereof have been challenged.
(b) The question of jurisdiction was raised but was not decided by the Tribunals which proceeded to pass order under section 6(6) of the Ordinance requiring deposit of the suit amount due to the expiry of time prescribing for deciding the suits.
(c) The decrees which were passed by the Banking Tribunals due to non compliance of the requirement to deposit the suit amount have been brought under challenge.
(d) The petitions in which the customers/borrowers filed reply to the show cause notice and finding the same as not satisfactory decrees were passed.
(e) The petitions invoking Constitutional jurisdiction of this Court on the plea that the appeal provided by the Ordinance is not adequate remedy. In some other cases the writ petitions have been filed though the appeals against the decrees passed have also been filed.
(f) The petitions challenging decrees and execution proceedings on the plea that the Ordinance is ultra vires the Constitution.
Besides, challenge is made to sections 6 and 9 of the Ordinance which is subject‑matter of question No.III referred to the Full Bench, the provisions of section 2(a), (c), (d), (e) and section 4 and section 12 of the, Ordinance have also been assailed on the plea that the same are violative of the I Article 25(l) and the theory of independence and separation of judiciary enshrined in the Constitution. The legislative history of the legal machinery provided for the recovery of the dues of the Banks is that firstly Ordinance No.23 of 1978 was promulgated which was then replaced by the Banking Companies (Recovery of Loans) Ordinance, 1979. This Ordinance was amended from time to time and by virtue of Amending Act, XVII of 1992 on 1‑8‑1992, the suits for recovery which were for more than Rs. ten million were made triable by the High Court. The Islamic modes of finance were introduced in the year 1980 and the first Circular dated 24‑12‑1980 was issued. By Ordinance No.58 of 1980, the distinction of the term ‘Loan’ in the Banking Ordinance, 1962 was amended. The term ‘Loan’ as contained in the Recovery of Loans Ordinance, 1979 was also amended by Ordinance 60 of 1980. Circular No.5 dated 5‑2‑1981 and Circular No.13 dated 20‑6‑1984 were also issued prescribing time limits for the payment/recovery of the finances advanced on the basis of modes recognised by the Muslim Economists. The Banking Companies and Finance Services Ordinance No.57 of 1984 introducing amendment in the Banking Laws was enforced with the introduction of the Islamic modes of Banking. With the introduction of the above measures, provisions were made for recovery of ‘Finance’ borrowed/enjoyed by the Customers from the Banks and the Financial Institutions. The Banking Tribunals Ordinance (Ordinance No.LVII) of 1984 was enforced. The case of the Government was that shorter procedure for recovery has to be provided as the customers/borrowers are not required to pay interest/penal interest as is the case of loan advanced on interest basis, and as such speedy recovery is essential to the successful implementation of Financial sector working on Islamic modes of finance as otherwise the customers/borrowers if not made to pay any liquidated damages or penalty block the significant quantity of funds leading to collapse of money market. It was urged that scheme of this Ordinance has to be different from the scheme and content of the law providing for recovery of loans advanced on the basis of interest. The constitution of the Banking Tribunals as contemplated in the Ordinance under challenge is to cope with the afore‑noted situation and seen in the light of the objectives sought to be achieved the Ordinance cannot be said to be violative of the theory of separation and independence of judiciary. it was argued that power to establish the Banking Tribunals will ‘ x all the trappings of Court is intra vires the Constitution and in fact federal Legislature is competent to legislate on the subject in view of the Entry NoO and 3 of the Concurrent ‘List and Entry Nos.14, 28 and 55 of the Federal List. This contention was sought to be repelled by the petitioner by advancing various pleas including the contention based on the theory of independence and separation of judiciary and Fundamental Rights enshrined in the Constitution of the Islamic Republic of Pakistan and equal protection of law Clause and right of access to justice. These pleas have been examined in detail in the judgment of even date in W.P. No.3372 of 1996 and for the Name reasons we held that sections 4 providing for establishment of the Banking Tribunals is ultra vires; of the Constitution and the banking Tribunals constituted thereunder are consequently held to be illegal and unlawful and the notifications appointing and constituting these Tribunals are,
3. As regards questions Nos.(i) and (ii) the learned counsel for the parties cited case‑law wherein principles for regulating the exercise of extraordinary Constitutional jurisdiction have been spelled out. These principles are well settled. The petitions under Article 199 of the Constitution during the pendency of the proceedings are maintainable where the Tribunal has acted without or in excess of jurisdiction. See Nagina Silk Mills, Lyallpur v. The Income‑Tax Officer, A‑Ward, Lyallpur and another PLD 1963 SC 322. The Constitutional jurisdiction of the High Court for reviewing acts, actions or proceedings which suffer from defect of jurisdiction or were coram non judice or mala fide (be it malice in fact or in law) remains available even where the decision of authority or tribunal is clothed with finality by the Law. Reference may be made to Federation of Pakistan and another v. Malik Ghulam Mustafa Khar PLD 1989 SC 26. The Federation of Pakistan through the Secretary . Establishment Division. Government of Pakistan Rawalpindi v. Saeed Ahmad Khan and others PLD 1974 SC 151. Another well‑settled principle is that Constitutional jurisdiction vesting in this Court under Article 199 of the Constitution cannot be taken away, abridged or curtailed by subordinate legislation, See Inayat Ullah and others v. M.A. Khan and others PLD 1964 SC 126, Nagina Silk Mills, Lyallpur v. Income‑Tax Officer PLD 1963 SC 322, Abdul Rashid v. Pakistan PLD 1962 SC 42, Muhammad Anwar v. Government of West Pakistan PLD 1963 Lahore 109, Abdul Rahim v. Chancellor of West Pakistan University of Engineering and Technology PLD 1964 Lahore 376 and Mrs. Shahida Zahir Abbasi and 4 others v. President of Pakistan as Supreme Commander of the Armed Forces, Islamabad and others PLD 1996 SC 362. The provisions providing remedy of appeal cannot be considered to have taken away the jurisdiction of the superior Courts. See Begum Nusrat Bhutto v. Chief of Army Staff etc. PLD 1977 SC 657 and Jamil Ahsan Gill, Advocate v. The State PLD 1980 Lahore 184. The remedy of appeal even if available before a Tribunal of limited jurisdiction has been held to be not effective in ousting the Constitutional jurisdiction of the superior Courts. The invocation of Constitutional jurisdiction under Article 199 is not allowed in cases where the remedy of statutory appeal is available and such remedy is effective and adequate. Even otherwise, if the right of appeal provided by statute is inadequate or is available under such conditions which has the effect of denying the right of appeal, the Constitutional jurisdiction is allowed to be invoked to afford relief to an aggrieved person in order to do justice. It is subject to these considerations that the discretionary extraordinary Constitutional jurisdiction is regulated by the High Court. See Nawabzada Muhammad Ali Khan v. Controller of Estate Duty and others PLD 1961 SC 119, Burmah Oil Company (Pakistan Trading) v. The Trustees of the Port of Chittagong PLD 1962 SC 113, Pakistan and another v. Qazi Ziauddin PLD 1962 SC 440, Nagina Silk Mills, Lyallpur v. The Income Tax Officer, AWard, Lyallpur and another PLD 1963 SC 322, Syed Ali Abbas and others v. Vishan Singh and others PLD 1967 SC 294, Abdul Ghani and another v. Government of Pakistan and others PLD 1968 SC 131, Members, Usmania Glass Sheet Factory Ltd., Chittagong v. Sales Tax Officer, Chittagong PLD 1971 SC 205 and The Murree Brewery Co. Ltd. v. Pakistan through the Secretary to Government of Pakistan, Works Division and others PLD 1972 SC 279, Custodian v. Jafram Begum AIR 1968 SC 169 and Lilavati v. State of Bombay AIR 1957 SC 527. It is also correct that the superior Courts have held in the following cases that the writ would not be competent even if deposit of money is required in cases where remedy of appeal in Banking Laws is provided. See Pakistan through Secretary, Ministry of Food and Agriculture v. Special Court (Banking), Sindh and others 1991 SCMR 2355, Pakistan Fishers Ltd., Karachi and others v. United Bank Ltd. PLD 1993 SC 109, Shaikh Gulzar Ali & Co. Ltd. and others v. Special Judge, Special Court of Banking and another 1991 SCMR 590, Ahmad Spinning Mills Ltd., v. Authority under Payment of Wages Act and others 1990 PC 26, Arshad Aziz, Managing Director, Imran Corporation (Pvt.) Ltd. and another v. Bank of Oman Ltd. and another PLD 1995 Lahore 6 and Messrs Tank Steel and Re-Rolling Mills (Pvt.) Ltd., Dera Ismail Khan and others v. Federation of Pakistan and others (PLD 1996 Supreme Court 77). These cases mostly have been decided with reference to Banking Companies (Recovery of Loans) Ordinance, 1979. These cases are distinguishable as the provision of appeal contained in section 9 of the Banking Tribunals Ordinance, 1984 is little different in content and application. The first two questions are answered in accordance with the principles pointed out above.
4. The subject‑matter of challenge in question No.(iii) pertains to certain parts of. section 6 and section 9 of the Ordinance. Section 6 reads as under: ‑
“6. Procedure of Banking Tribunal.‑‑‑(I) Where a customer commits default in fulfilling any obligation to a Banking Company, the Banking Company may file against such customer with Banking Tribunal a plaint which shall be verified on oath by the Branch Manager or an officer of the rank of Assistant Vice‑President or Assistant Manager or such other officer as the Board of Directors of the Banking Company may authorise in this behalf.
(2) On a plaint being filed with the Banking Tribunal in accordance with the provisions of subsection (1), the Banking Tribunal shall issue notice requiring the defendant to show cause, within ten days of the service of such notice, as to why decree as prayed for in the plaint should not be passed against him.
(3) The notice under subsection (2) shall be served on the defendant in accordance with the procedure for service of notice laid down in subsection (3) of section 4 of the Banking Companies. (Recovery of Loans) Ordinance, 1979 (XIX of 1979).
(4) Upon the defendant failing to file a reply within the time given in the show‑cause notice under subsection (2) or upon rejection by the Banking Tribunal of the plea taken by him in the reply, the Banking Tribunal shall pass a decree in favour of the Banking Company as prayed for in the plaint.
(5) In the event of the Banking Tribunal passing a decree against the defendant failing to give a reply to show‑cause notice within the period specified in ‘ subsection (2), the Tribunal may, on the application of the defendant filed within thirty days of the passing of the decree, set aside the same and permit the defendant to file his reply under that subsection provided it is satisfied that there was sufficient cause for the defendant not having filed the reply within the specified period.
(6) All suits filed in the Banking Tribunal shall be disposed of within ninety days of the filing of the plaint and, in case the proceedings continue beyond the said period, the defendant shall be asked to furnish a bank guarantee acceptable to the Banking Tribunal to the extent of the claim in suit and, on failure of the defendant to furnish such bank guarantee within a period of fifteen days, the Banking Tribunal shall pass a decree in favour of the Banking Company as prayed for in the plaint:
Provided that, where the claim of the Banking Company is based on default of the defendant in payment of agreed instalments, the bank guarantee shall be to the extent of the amount of instalments in default:
Provided further that, in case the proceedings continue beyond a further period of one hundred and twenty days, the defendant shall deposit with the Banking Tribunal in cash the amount.
(7) Any amount deposited by the defendant with the Banking Tribunal .under subsection (6) may be withdrawn by the Banking Company upon an undertaking to refund the same to the Banking Tribunal if so ordered at any time.
(8) Where the claim filed before the Banking Tribunal is for the enforcement of a mortgage of immovable property, ‘decree’ shall mean final decree for foreclosure, sale or redemption, as the case may be, as provided in Order XXXIV of the First Schedule to the Code of Civil Procedure, 1908 (V of 1908).”
The learned counsel for the petitioners mainly raised objection as against the provisions of subsections (4) and (6) of this section. As regards, subsection (4), it was urged that the framers of the law had neither spelt out any grounds or basis for rejection of the reply nor any guiding principles have been laid down regulating the discretion/the power for rejecting the reply. In our view, the mere fact that in case of failure to file a reply to his show‑cause notice or the reply being found unsatisfactory and decree is to follow does not make any difference as similar provisions are found in Order XXXVII, C.P.C. which is followed by the normal Civil Courts. If a suit is filed under Order XXXVII, the defendant is to apply for leave within 10 days and upon such an application the Court is to decide whether leave is to be granted or not to be granted and in case of failure to file an application if the same is filed but is found to be unsatisfactory a decree is to follow. The superior Courts have settled law as regards the grounds in the presence of which the reply is to be found unsatisfactory and is to be rejected. These precedents as such provide for the vacuum and are available for controlling the exercise of jurisdiction vested in the Tribunal or the Court in such a situation. The challenge made to this subsection on this secore has no merit.
5. Next coming to the objection taken with regard to subsection (6) which provides that the suits shall be disposed of within 90 days of their filing and in case the proceedings continue beyond the said period, the defendant shall be asked to furnish a bank guarantee to the extent of the claim in suit and on failure of the defendant to furnish such a bank guarantee within 15 days, the Banking Tribunal shall pass a decree in favour of the Banking Company as prayed for in the plaint; ‑provided that when the claim of the Banking Company is based on default of the defendant in payment of the agreed instalments, the bank guarantee shall be to the extent of the amount of instalments in default. The second proviso provides that in case the proceedings continue beyond a further period of 120 days, the defendant shall deposit with the Banking Tribunal in cash the amount of the claim in the plaint and on failure to make such deposits within 15 days a decree shall follow as prayed for in the plaint. The objection is that mere passage of time irrespective of the reasons due to which the trial of the suit could not conclude the mandatory direction to pass the decree in favour of the Banking Company is not only unreasonable but also arbitrary and illegal. It was argued that 90 days or 120 days may have passed because of the non- availability of the Presiding Officer due to his sickness or otherwise the Banking Company itself has been seeking adjournments. Subsection (6) of section 6 was substituted by section 9‑A of the Finance Act, 1990 (VII of 1990). The subsection (6) as originally enacted reads as follows:‑‑
“(6) All suits filed in the Banking Tribunal shall be disposed of within ninety days of filing of the plaint and in case proceedings continue beyond the said period, the defendant shall be asked to deposit in cash or to furnish a security, acceptable to the Tribunal, equal in value to the claim in suit, and, on failure of the defendant to make such deposit or furnish such security, the Banking Tribunal shall pass decree in favour of the Banking Company as prayed for in the plaint:
Provided that, where the claim of the Banking Company is based on default of the defendant in payment of agreed instalments, the deposit or security shall be to the extent of the amount of instalments in default:
Provided further that the requirement of deposit in cash or furnishing of security may be dispensed with if in the opinion of the Banking Tribunal the delay is not attributable to the conduct of the defendant. “
Subsection (6) as originally enacted contemplated order to deposit in cash or to i furnish security equal to the value of the claim in suit in case the suit could not be disposed of within 90 days and proceedings linger on beyond the said period: the second proviso further provided that requirement of deposit in cash or furnishing of security could be dispensed with if in the opinion of the Banking Tribunal the delay is not attributable to the conduct of the defendant. These provisions as originally enacted were reasonable as stringent action was to be taken if the defendant by his conduct made the proceedings to linger on resulting into non‑conclusion of the proceedings. No reason could be advanced by the learned counsel for the respondents for making the law look unreasonable, unjust, despotic and arbitrary. Learned counsel for the respondents‑banks faced with this situation sought to take refuge under the principles of reading down of the law. They canvassed that the condition of conduct of the defendant delaying the proceedings may be read in the said subsection. The principle of reading down the law is well‑established but the same cannot be applied in this case as the Legislature by specific amendment has made its intendment. Clear that delay for any reason whatsoever must result in allowing the claim of the Banking Company and passing of the decree. There cannot be any two opinions that the subsection (6) as it stands presently is not only unreasonable, unjust, unfair and if we may so say with respect is even despotic and amounts to legislative judgment. We have, therefore, no hesitation to striking it down with the result that subsection (6) of section 6 as originally enacted would stand revived.
As regards section 9 the objection is that the condition of depositing the decretal amount is harsh and sometime may amount to extinguish the right of appeal especially in a situation where a decree has been passed merely on account of expiry of the period of 120 days though the defendant was not at fault. Relying upon various precedents it was urged by the learned counsel that subjecting‑ right of appeal to the condition of deposit of total amount of. the decree amounts to negating the right of appeal itself. It was emphasised that in an Islamic State and Polity right of appeal which has been granted by the Islamic Principles cannot any longer be said to be available if only statute so provides but, on the other hand, every law must provide for an appeal in its true sense.
6. Respondents’ learned counsel has reiterated the often advanced arguments that the appeal is a creature of a statue and if any condition is attached to it by the statute itself, those provisions cannot be objected to.
7. In view of Article 2A and Article 227 of the Constitution of the Islamic Republic of Pakistan, 1973, there cannot be any doubt that this Court is under an obligation to construe the statutes keeping in view the principles enshrined in the Holy Qur’an and Sunnah. See Commissioner of Income Tax, Peshawar Zone, Peshawar v. Semen A.G. PLD 1991 SC 368. The Supreme Court of Pakistan while examining the provisions of Pakistan Army Act ruled in Pakistan through Secretary, Ministry of Defence v. General Public PLD 1989 SC 6 that under Islamic system of dispensation of justice, the appeal is a natural right vesting in an individual which cannot be taken away and law must provide at J least one appeal.
8. The question as to whether the right of appeal can be made subject to condition of deposit came before the Supreme Court of Pakistan in M/s. Eastern Rice Syndicate v. Central Board of Revenue PLD 1959 SC (Pak.) 364 wherein it was ruled that such a condition, amount to negation of the right of appeal itself. We are, therefore, of the view that the provisio to section 9 places al. unreasonable restriction on the right of appeal and cannot, therefore, be upheld.
9. While so holding we are fully conscious of the fact that the public dues especially those advanced under the Islamic System of Banking cannot be allowed to be stuck up and anxiety of the Legislature in this behalf must be respected. However, this purpose, can be achieved by enacting a law in the same nature as section 12 of the Banking Companies (Recovery of Loans) Ordinance, 1979 which vests a discretion in the Court to dispense with the, condition of deposit of the decretal amount and instead order furnishing of security. We may also state that as a matter of practice the execution of money decrees are not stayed by this Court while hearing appeals against such decree and as such apprehension that during pendency of the appeals the Banks would be deprived of the decretal amount, is not well‑founded. On the other hand, we have come across some cases, where the decrees have been passed against persons who are not borrowers or customers and in respect of properties belonging to third persons without following due procedure or keeping in view, K the well‑accepted principles of justice. In such cases one cannot deny the right of appeal, to the affected persons. If the decree passed by the Tribunal is legal and valid in all respects, surely the Appellate Court may not even interfere at the limine stage. The Appellate Court may well make stay subject to deposit of decretal amount. At this stage, it may also be mentioned that under section 11 of the Banking Tribunals Ordinance, 1984, in case of non‑payment of the decretal amount within the stipulated period, the Court is not powerless to compensate the decree‑holder but can award liquidated damages.
10. Again the non‑application of the Limitation Act cannot be objected to as it is the prerogative of the Legislature to make or not to make a law applicable including the law of limitation or to provide different limitation periods for different purposes.
The question No.(iii) and other contentions dealt with above are answered accordingly.
11. For the above reasons, section 4, section 6(6) as amended by Act VII of 1990 (as it presently stands), first proviso to section 9 of the Banking Tribunals Ordinance, 1984 are hereby declared unconstitutional as these erode the
independence of judiciary and are hit by Article 175 read with Articles 2A, 4, 8 and Article 25 of the Constitution of Islamic Republic of Pakistan and the notifications appointing Presiding Officers of the Banking Tribunals issued
under the Banking Tribunals Ordinance, 1984 are equally unconstitutional and without lawful authority and are hereby quashed.
12. Before parting with the case we may also state that the declarations M made by us in this judgment shall not affect cases past and closed or invalidate the judgments/decrees, orders, fines or sentences or proceedings which have become final. As a result of this judgment no vacuum will be created as these cases are also triable by the Courts created under the Banking Companies (Recovery of Loans) Ordinance, 1979, which can also try cases under the Islamic System of Banking after the amendment of the definition of loan by the amending Ordinance No. 58 of 1980:
13. As consequence of the above, the cases pending before the Banking Tribunal shall stand transferred to the respective Banking Courts. In cases where the value of the suit is more than Rs. 10 millions, the files be transmitted to the High Court and in cases where the value is less than Rs. 10 millions the files will be sent to the Banking Courts of the respective districts. As with the declarations M made and directions given above, nothing remains to be dealt with and these writ petitions need not be referred back to the respective Benches. The writ petitions stand disposed of accordingly with no order and as to costs.
(Tanvir Ahmad Khan), Judge.
(Malik Muhammad Qayyum), Judge.
M.B.A./C‑5/L Petitions disposed of.