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IN THE HON’BLE SUPREME COURT OF PAKISTAN (Appellate Jurisdiction)

CPLA No. ______________ / 2009

The National Bank of Pakistan a statutory body established under the National Bank of Pakistan Ordinance, 1949, having its head office at I.I. Chundrigarh Road, Karachi and a branch at 69/2 Abid Majeed Road, Lahore Cantt. Through its duly authorised attorney Javed Muhammad Iqbal Uddin, Asstt. Vice President & Wing Incharge, National Bank of Pakistan, SAMG, Head Office, Karachi.

…Petitioner

Versus

1. SAF Textile Mills Limited, through Shazia Said Khan, Chief Executive/director, 2/3 Wapda House, Lahore.

2. Federation of Pakistan through Secretary

Ministry of Law, Justice, Human Rights and Parliamentary Affairs, Government of Pakistan, Islamabad.

…Respondents

PETITION UNDER ARTICLE 185(3) OF THE ISLAMIC REPUBLIC OF PAKISTAN, 1973, SEEKING LEAVE TO APPEAL AGAINST THE JUDGMENT DATED 23.12.2008 PASSED in WP No. 5076/2007 BY THE HONORABLE FULL BENCH OF THE LAHORE HIGH COURT, LAHORE WHEREBY IT STRUCK DOWN SECTION 15 OF THE FINANCIAL INSTITUTIONS (RECOVERY OF FINANCES) ORDINANCE, 2001, AS BEING ULTRA VIRES OF THE CONSTITUTION OF THE ISLAMIC REPUBLIC OF PAKISTAN, 1973.

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Respectfully Sheweth:- The Petitioners respectfully states as follows:

This petition involves the following substantial questions of law

that are of public importance.

QUESTIONS OF LAW

I. Whether Section 15 of the Ordinance, 2001 (“Ordinance of

2001”) is void under Article 8 of the Constitution of Islamic

Republic of Pakistan, 1973 on the ground of being against the

fundamental rights granted therein.

II. Whether Section 15 of the Ordinance, 2001 amounts to

usurpation of judicial powers by financial institutions.

III. Whether the Federal legislature went beyond the scope of its

law making powers while enacting Section 15 of the Ordinance,

2001 so as to facilitate recovery of money by financial

institutions secured under a mortgage by following the

procedures laid down thereunder.

IV. Whether Section 15 of the Ordinance, 2001 reflected such

inconsistency within the framework of the Ordinance, 2001 that

could justify its striking down.

V. Whether the exercise of any right granted to a person without

requiring him to first have recourse to a court, would amount to

being a judge in one’s own cause.

VI. Whether the Honourable Lahore High Court, Lahore was right in

striking down Section 15 of the Ordinance, 2001 in case of any

perceived harshness rather than suggesting some remedial

measures through calling upon the Government to exercise the

rule making powers or by proceeding in the manner adopted by

the Honourable Supreme Court of Pakistan in the case of

Asfandyar Wali Khan.

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VII. Whether Section 15 of the Ordinance, 2001 amounted to

conferment of unbridled powers on the financial institutions

despite the fact that it prescribed a transparent procedure for

sale, required proper accounting before the Banking Courts,

allowed challenge to the sale under sub-section (11) of Section

15, allowed grant of interim relief under sub-section (12) and

also allowed an appeal under Sub-Section (11).

VIII. Whether the grounds set out by the Honourable Lahore High

Court, Lahore in paragraph 29 of the judgment were sufficient

to strike down a statutory provision.

IX. Whether Section 15 of the Ordinance of 2001 amounted to

illegal discrimination amongst classes placed in similar

circumstances.

X. Whether the power available to Courts of ‘reading down’ a law

(in proper circumstances) was available to the extent that a

Court could strike down an entire provision of a statute despite

clear legislative intent that such provision of the statute should

prevail over other provisions of the statute, especially when,

properly speaking, the principle of ‘reading down’, as

enunciated by common law judgments is not aimed at striking

down a statutory provision but to seek an interpretation of

various provisions in a manner that allows them to exist and

operate in a harmonious manner?

XI. Whether Section 15 of the Ordinance, 2001 was void as being in

conflict with Articles 2-A, 3, 4, 9, 23, 24, 25 and 175 of the

Constitution.

FACTS OF THE CASE 1. That the Petitioner is a statutory body/corporation established

under the National Bank of Pakistan Ordinance 1949, having its

head office at I.I. Chundrigar Road, Karachi and a branch at 69/2

Abid Majeed Road, Lahore Cantt. It is a financial institution in

terms of Section 2(a) of the Ordinance of 2001. This

Appeal/Petition is being filed through Mr. Javed Muhammad

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Iqbal Uddin, who is a principal officer of the Petitioner Bank and

competent to file this petition and to do all acts necessary or

incidental for proper prosecution of the case vide power of

attorney in his favor being well conversant with the facts of the

case and has signed and verified the same.

2. (a) This petition seeks leave to appeal against

judgment/order passed by the Honourable Lahore High

Court, Lahore on 23.12.2008 that has struck down Section

15 of the Ordinance of 2001 under which financial

institutions had been empowered to bring mortgaged

properties to sale by following the procedure set out in

that Section.

(b) The Ordinance of 2001 had been promulgated in the year

2001. It is the final piece of legislation in a series of

statutes that were enacted, from time to time, to facilitate

recovery of amounts owed to various financial

institutions by their customers. Prior to these legislative

measures, all financial institutions (excepting a few

statutory corporations such as IDBP etc.) could proceed

for recovery of stuck up loans only by filing recovery

suits in the ordinary civil courts that followed the general

procedure of civil litigation visualized under the Code of

Civil Procedure, 1908. However, since, very often, the

legal procedures were abused by the

customers/defendants to delay recoveries, a need was felt

to create special laws and special courts to facilitate

recovery of amounts owed to the financial institutions.

The first statute in this context was the Banking

Companies (Recovery of Loans) Ordinance, 1979. It was

followed by Banking Tribunals Ordinance, 1984 and

thereafter by the Banking Companies (Recovery of Loans,

Advances, Credits and Finances) Act, 1997.

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(c) However, even after the promulgation of above special

banking laws and establishment of special Banking

Courts, the banks’ default rose to as high as Rupees. 356

billion. This disturbing condition of the banking sector

and the need to take extraordinary remedial measures for

the same was even taken as one of the grounds for

validating the military takeover of October 1999 by the

Apex Court in its judgment titled as Zafar Ali Shah v.

Pervaiz Musharraf and reported as PLD 2000 SC 869 at

1217.

It was in the above background that the Ordinance of

2001, which replaced the Banking Companies (Recovery

of Loans, Advances, Credits and Finances) Act, 1997 and

that gave powers of direct sale of mortgaged properties to

the financial institutions, was promulgated.

d) A distinctive feature of the Ordinance of 2001 was that it

empowered financial institutions to sell mortgaged

properties without intervention of court subject to the

strict compliance of procedure set out in Section 15 of the

Ordinance of 2001. Briefly, the procedure required that in

case any money secured by a mortgage (hereinafter the

“Mortgage Money”) was in default, two successive

demand notices for payment of outstanding Mortgage

Money within 14 days and, thereafter, a final demand

notice for payment of outstanding Mortgage Money within

30 days had to be served on the mortgagor (and any other

person having any interest therein). In case the

outstanding Mortgage Money was not paid as demanded

under said three demand notices, the financial institution

was empowered to sell the mortgaged property by public

auction after advertising the sale, in the prescribed

manner, in English and Urdu newspapers having wide

circulation in the area where the mortgaged property is

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situated. On the sale having taken place, the financial

institution was required to file proper accounts relating to

the said sale in the Banking Court within 30 days of the

sale. Any dispute relating to the sale could be challenged

under Sub-Section (11) of Section 15 the Ordinance of

2001. The Banking Court could also grant an injunction

restraining the sale provided:

(i) it was satisfied that no mortgage in respect of the

immovable property had been created; or

(ii) all moneys secured by mortgage of the mortgaged

property had been paid; or

(iii) the mortgagor or the objector deposited in the

Banking Court in cash the outstanding Mortgage

Money.

3. That the Respondent created mortgage over his/her/its

immovable property in favor of the Petitioner to secure the

payment obligations under certain finance facility(ies) that

was/were availed from the Petitioner.

4. That the Respondent defaulted in its payment obligations

towards the Petitioner in respect of the said finance facility(ies).

5. That the Petitioner decided to liquidate the security by selling

the mortgaged property(ies) under Section 15 and thus initiated

the strict set of formalities that it was required to meet under

Section 15.

6. That the Respondent instead of paying the Petitioner, getting

the mortgage over the mortgaged property redeemed or to

settle the loan, challenged the vires of Section 15 under Article

8 of the Constitution of Pakistan, 1973 before the honorable

Lahore High Court, Lahore at Lahore.

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7. That this petition was heard, along with a number of other

constitutional petitions raising the same legal issues, by an

honorable Full Bench of the Lahore High Court, Lahore which,

by its judgment announced on 23-12-2008, struck down Section

15 of the Ordinance of 2001 as being contrary to the

constitutional scheme and, therefore, void. It is submitted that

the vires of Section 15 of the Ordinance of 2001 had earlier

been challenged before the honorable Balochistan High Court

also, in the case titled as Sh. Abdul Sattar Lassi Vs. Federation

of Pakistan and Others which, vide its judgment delivered on

27-7-2006, [reported as 2006 CLD 18], held that Section 15 was

consistent and in accordance with the Constitution of the

Islamic Republic of Pakistan, 1973.

8. That the Petitioner feels aggrieved by the impugned judgment

delivered by the honourable Lahore High Court, Lahore on 23-

12-2008 and prays that the same be set aside on the following

grounds amongst other:

G R O U N D S

A) The impugned judgment is against the fundamental principle

that all laws should be deemed to have been validly enacted

and that a very heavy burden was cast on any person

challenging their validity. In the present case, Section 15 of the

Ordinance, 2001 has been struck down on grounds that it failed

to fulfill constitutional requirements. It is submitted that the

impugned judgment is based on grounds and reasoning that

cannot be sustained if subjected to correct legal analysis. The

judgment is based on ten specific grounds set out in its

paragraph 29. It is respectfully submitted that if a closer

analysis is made of these grounds, not a single ground

provides sufficient material to strike down the legislation that

had been challenged. These grounds are discussed in the

paragraphs that follow.

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(i) The first ground stated in the judgment is that “No

procedure is provided to be adopted for public auction”.

It is respectfully submitted that a clear procedure is set

out in sub-section 4 of Section 15 of the Ordinance, 2001.

It gives the mode of advertising a sale, and the contents

of the notice of sale. As far as the mode of conducting the

actual auction is concerned, the word “auction” is a term

of art and the procedures that are followed are already a

matter of knowledge in the public domain.

Section 15(11) of the Ordinance of 2001 provides for

resolution of all disputes relating to the sale. Thus, any

person having any grievance regarding the procedure or

manner in which the public auction may have been

conducted by a Financial Institution may approach the

Banking Court, which will examine and decide the

objection of the customer/mortgagor on the touchstone of

the procedure given in Code of Civil Procedure, 1908 as

provided in Section 7(2) of the Ordinance of 2001.

ii) The second ground stated in the judgment is that “The

provision is silent as to the manner of fixing reserve

price”.

It is submitted that there is no established principle of law

that in any sale of property there must be a reserve price,

as a fundamental legal requirement. Even under the Code

of Civil Procedure, 1908, in which the format of

proclamation of sale is suggested in Order 21 Rule 66,

there is no requirement that there must always be a

reserve price. Whether or not there should be a reserve

price is purely a matter of discretion to be exercised,

when the terms of proclamation of sale are to be drawn

up.

iii) The third ground stated in the judgment is that “The

Financial Institution is conferred with the authority to sell

and itself purchase the mortgaged property, transfer the

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same and get the sale deed registered in the name of

purchaser. The omnibus powers of the Financial

Institution are also against public policy. Financial

Institution by virtue of impugned provision becomes the

buyer, the seller and the registering or transferring

authority. Unbridled powers in the hands of the

mortgagee to sell the property, purchase the same and

get it transferred in its name, by all means is unequal

treatment and the rights of mortgagee are preferred over

the interest of mortgagor. The Financial Institution in this

exercise sits as judge of its own cause”.

It is submitted that this ground is not sustainable.

a) Under Section 15 of the Ordinance of 2001,

Financial Institutions may not simply purchase

outright the property that they want to be sold. First,

Financial Institution has to follow the whole process

of public auction transparently by issuing three

statutory notices and thus giving the mortgagor

right to redeem the mortgage, publish public

auction notices in the newspapers, then conduct

public auction and receive bids etc. Only after this,

the Financial Institution will become entitled, if it so

desires, to match the highest bid received and only

then it may purchase the property at the price that

must be equal to the highest bid that it may have

received in open auction.

b) It was also not correct to say that while executing

the Sale Deed, a Financial Institution becomes the

‘registering authority’. The registering authority

would always remain the Registrar of Documents

under the Registration Act, 1908.

c) The power of sale is not unbridled. The sale has to

be conducted in a transparent manner as given in

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Section 15 and proper accounts have to be

submitted to the Court under Section 15(1) of the

Ordinance of 2001. If the Financial Institutions

seeks to conduct a sham auction without making

the best effort to obtain the highest price for the

property being sold, the mortgagor has always the

right to object to it in Banking Court under Section

15 (11).

The argument that there is any inequality between the

mortgagor and the mortgagee does not take into account

the legal relationship between the mortgagor and

mortgagee. According to the Transfer of Property Act, 58

the word ‘mortgage’ has been defined as transfer of

interest in the specific immovable property’. After

creation of mortgage, all that remains in the hand of the

mortgagor property, is only the ‘equity of redemption’

and, the right to receive whatever remains surplus to the

claim of the mortgagee after sale of the property. The

mortgagee realizes only its own security, on failure of the

mortgagor to redeem. There can be no question of

equality between the mortgagor and mortgagee. Under

Section 15, the mortgagee is entitled to sell the property

only after giving the mortgagor ample notices and

opportunities to get the property redeemed. Customers

routinely borrow money from banks on the security of

pledge. In case of pledge exactly the same kind of right is

exercised as under Section 15 i.e. sale of secured

property on failure to pay after notice. And yet, the courts

have never held that when the pledgee is proceeding to

sell the pledged goods the pledgor and the pledgee are in

unequal position or that pledgee is acting as a judge in its

own cause.

iv) The fourth ground stated in the judgment is that “A loan,

which is also secured by pledge, is to be recovered from

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sale of the pawner’s pledged goods. The pawnee can

legally recover its debt only when such pawnee is in a

position to deliver back or return the pledged goods.

Financial Institution through impugned provision, can

recover the debts through sale of mortgage property,

even when the Financial Institution is unable to deliver

the pledged goods.”

It is difficult to understand the exact reasoning involved.

The relevant principle is that a pledgee must be in a

position to return the pledged goods if the pledgor

desires to redeem the pledge. In the present case the

procedure visualizes that three notices would be served

on the mortgagor giving him an opportunity to redeem the

mortgage. Evidently, the mortgaged property would

always remain available for redemption if the mortgagor

chooses to do the same till such time that the auction has

taken place. It is not the case that financial institutions

could not be in a position to make the property available

for redemption, if the mortgagor so chooses before the

sale has been concluded. In fact, even in the case of a

pledge, the option to redeem the pledge would be

available only till such time that the sale of pledged goods

had been concluded. It is, therefore, not at all the case

that the Financial Institution would not be able to make

the property available if the mortgagor desires to redeem

after the statutory notices.

It is also possible that the reasoning was as follows: ‘if a

loan is secured by a pledge and also by a mortgage, then

the lender may not sell the mortgaged property in case it

no longer holds pledged goods because perhaps they

have been lost or destroyed etc.’

If above is the reasoning, then again it is not sustainable

because:

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Firstly, a loan, which is secured by more than one

security (e.g. pledge, mortgage, lien on foreign currency

account etc.), can be legally recovered by

liquidating/converting into cash either one or all of them

in case any amount remains outstanding even after the

liquidation/converting into cash of one security.

Secondly, even where the pledgee is, due to any reason

whatsoever, not in position to return the pledged goods

to the pledgor then the pledgor may sue the pledgee for

not returning the pledged goods. But this in itself will not

affect the lender’s right to sell mortgaged property under

Section 15.

v) The fifth ground stated in the judgment is that “The

impugned enactment prescribes the mechanism of

recovery from mortgagor and principal borrower but is

silent about recovery from Financial Institution or its

obligation to pay. Both the parties are not treated equally

which is against the spirit of articles 4 & 25 of the

Constitution”.

The reasoning of the Honourable Court appears to based

on some misunderstanding that the remedies provided in

Section 9 and Section 15 of the Ordinance of 2001 are of

the same category, and because they are of the same

kind, while under Section 9, both the borrower and lender

may claim money from each other, in Section 15, only the

Financial Institution can. The completion of formalities by

a Financial Institution to sell mortgaged properties in

case of default is not a judicial or quasi-judicial process

of adjudication of claims. It is merely a power that the

legislature in its wisdom found fit to give to Financial

Institutions to enable them to convert the security

(mortgage over immovable property) into cash by strictly

following a stringent set of formalities for selling the said

property through public auction.

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Exercise or non-exercise of Section 15 powers by

Financial Institutions does not in any way affect or impair

either the Financial Institution or the customer’s right to

claim through Banking Court any money from the other

party that they may be entitled to.

Sub-Section (1) of Section 9 of the Ordinance of 2001

provides as follows:

“Where a Customer or a Financial Institution commits or

defaults in fulfillment of any obligation with regard to any

finance, the Financial Institution or, as the case may be,

the Customer may institute a suit in the Banking

Court……..”.

Section 15 powers are therefore, not in substitution of the

parties’ right to claim money from each other through

Banking Court under Section 9. Section 15 applies only to

the sale of the mortgaged properties by the mortgagees

for recovery of outstanding Mortgage Money. The

Financial Institution would have to account for the

proceeds of the sale. In case the Financial Institution still

needs to file a recovery suit, the amount already

recovered under Section 15 would go towards reducing

its claim.

Section 15(13) itself clarifies this position as follows:

“The rights and remedies under this section are in addition to, and not in lieu of, any other rights or remedies a financial institution may have under this Ordinance.”

Also, the question of inequality does not arise here as the

concept of providing any right exclusively to a certain

class of persons vide a statutory provision is not new to

legislative enactments and have also been held to be

valid by superior courts in Pakistan and abroad.

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Despite the above, further submissions on this ground

are as follows:

a) The very name of the Ordinance of 2001 (i.e.

Financial Institutions (Recovery of Finances)

Ordinance 2001) makes the intention of the

legislature in promulgation of this ordinance

abundantly clear.

b) Even a mortgagee (i.e. a Financial Institution)

cannot recover any money/amount under Section 15

over and above the Mortgage Money and for the

recovery of the same it shall have to file a separate

suit under Section 9 of the Ordinance of 2001.

As far as recovery of any outstanding amount by the mortgagor and/or the principal borrower from the Financial Institution or vice versa is concerned, a clear procedure for the same has been given in s.9 of the Ordinance of 2001.

c) Further, in case a Financial Institution has already

received all the money/amount that it is entitled to

receive and is still proceeding to sell the mortgaged

property, the mortgagor can challenge it under Sub-

Section (12) of Section 15 of the Ordinance of 2001,

by approach the Banking Court and obtaining an

injunction restraining the sale or proposed sale of

mortgaged property on the ground that ‘all moneys

secured by mortgage of the mortgaged property

have been paid’.

vi) The sixth ground stated in the judgment is that “A time

barred debt can be recovered under the impugned

provision and valuable rights of the borrower are

snatched, smothered and stymied, which have accrued to

the customer with the flux of time. Snatching away of

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such rights is against the mandate of Articles 4, 23 and 24

of the Constitution”.

This reasoning is contrary to established principles of

law. The law of limitation only provides for a time frame

for seeking access to courts after a person acquires a

cause of action. It is an established principle of law that

limitation does not destroy the right but only bars a

remedy that requires intervention of the court. The entire

system of law is structured around self help remedies as

well as remedies requiring support of judicial powers.

Section 176 of the Contract Act, visualizes a self help

remedy allowing a pledgee to bring the pledged goods to

sale, privately. A bank having funds of the debtors in its

hands can exercise the right of “set off” without the need

of intervention of the court. Similarly, a Bank holding

securities can bring them to sale under a power of sale.

Even otherwise, there has hardly been a case in which

Section 15 has been invoked, after period of limitation for

enforcement of a mortgage had expired. Limitation period

for enforcement of a debt is only 3 years, while for

enforcement of a mortgage it is 12 years from accrual of

the cause of action.

vii) The seventh ground stated in the judgment is that “The

mortgagee can recover penalties, other charges and

damages without any proof thereof, which is exploitative

on its part and a violation of Articles 2-A, 3 and 4 of the

Constitution”.

a) It is incorrect that a Bank can recover any money

that would not constitute the “Mortgage Money”. If

any attempt is made to bring the property to sale for

recovery of any amount not secured by the

mortgage or which cannot, otherwise, be claimed,

the mortgagor can challenge the same under sub-

section (12) of Section 15 of the Ordinance, 2001. A

Financial Institution would also be accountable for

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any unjustified recovery since under sub section

(10) it must render proper accounts and under sub

section (9) only rightful dues under the mortgage

are available for distribution between the

mortgagees, and the surplus amount has to be paid

over to the mortgagor. The mortgagor could also

file a suit under Section 9 for recovery of amount

that it may be entitled to claim.

b) Under Section 15, mortgagee may only recover what

it is entitled to recover under their arrangement with

the mortgagor. According to the language used in

Section 15, the mortgagee can only recover

‘Mortgage Money’ and no amount other than that.

Section 15(1)(b) defines the ‘Mortgage Money’ as

follows:

“‘Mortgage Money’ means any finance or other amounts relating to a finance, penalties, damages, charges or pecuniary liabilities payment of which is secured for the time being by the document by which the mortgage is effected or evidenced, including any Mortgage Deed or Memorandum of Deposit of Title Deeds.”

The above definition of the ‘Mortgage Money’

clearly indicates that even the mortgagee cannot

recover penalties, other charges and damages if it

is not entitled to do so by the mortgagor through

mortgage documents that the mortgagor may have

executed at the time of creation of mortgage.

Even otherwise, it is mandatory upon the

mortgagees to file ‘proper accounts of the sale’ in

the Banking Courts within 30 days of the sale to

ensure transparency of the sale and adjustments of

the sale proceeds received thereof.

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c) Section 15 does not in any way protect a Financial

Institution from any claim from the mortgagor to

hold it accountable for having recovered any

amount that it was not entitled to recover or to

support that, which it has no proof of. Regarding its

application and treatment of the sale proceeds, the

Financial Institution is required to submit proper

accounts in the Banking Court and it is also

required to pay any surplus amount to the

mortgagor.

viii) The eighth ground stated in the judgment is that “The

mortgaged property is auctioned for recovery of an

amount, which is unascertained and undetermined.

Financial Institution can sell the mortgage property

without proving that the mortgage was created for the

loan sought to be recovered through sale or it relates to

some other loan between the same parties. The powers of

the Financial Institution are clearly violative of articles 2-

A, 3, 4, 23 and 24 of the Constitution”.

It is incorrect that any property can be sold as stated in

this ground. If a Financial Institution seeks to sell the

property to recover an amount which was not secured on

the property, or which related to some other transaction,

such attempt could be restrained by seeking an injunction

under Section (12) of Section 15. It is clearly stated that a

restraining order may be issued if the court is satisfied

that no mortgage in respect of the immovable property

had been created. As regards any amount being

unascertained and undetermined, sub-section (12) of

Section 15 of the Ordinance, 2001 permits the mortgagor

or the objector to deposit in the Banking Court any

amount actually owed.

ix) The ninth ground stated in the judgment is that “The

impugned provision has failed to save the borrower from

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malafide action of the lender, which offends Articles 2-A,

3, 4 & 9 of the Constitution”.

It is not correct that Section 15 excludes protection to the

mortgagor against mala fide action of the Financial

Institution. Section 15 does not provide any immunity to

the Financial Institutions from any criminal or civil action

that the borrower/mortgagor may be entitled to bring

because of any mala fide exercise of Section 15 powers.

There are often provisions in statutes requiring a certain

income tax commissioner or sales tax commissioner or

any other government officer or any private person to act

in a certain manner or to follow a certain procedure. All

those cannot be declared illegal and void simply because

the statute does not formally spell out provisions

protecting the potential affected person (e.g. income tax

payer) from any mala fide exercise of power. Any person

who is required to act in a certain manner will have to act

in that manner otherwise that person may have to face

civil or criminal action. This ground would have been

relevant if Section 15 had sought to give a blanket

immunity to Financial Institutions from any mala fide

exercise of their power. But no such protection has been

given.

In addition to the above, it seems that the legislature was

extraordinarily careful in safeguarding the interest of the

innocent mortgagors from any mala fide actions of the

mortgagees. Some of the examples of the safeguards are

as follows:

a) Sub-Section (2) of Section 15 lays down a certain

set of very stringent requirements that have been

introduced to safeguard the interest of the

mortgagor to be complied with by a mortgagee

before selling any mortgaged property under

Section 15. These include sending three different

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demand notices, thereby giving in aggregate almost

a two months time period to the mortgagor for

settlement and payment of outstanding Mortgage

Money.

b) Under Sub-Section (4) of Section 15, the mortgagee

has been made bound to publish notice of sale of

the mortgaged property in two newspapers (English

& Urdu) widely circulated in the province where the

mortgaged property is situated.

c) Under Sub-Section (4) of Section 15, the mortgagee

is bound to sell the mortgaged property through

open Public Auction thus ensuring transparency.

d) Under Sub-Section (6) of Section 15, the mortgagee

selling any mortgaged property under Section 15

cannot itself evict or dispossess the mortgagor or

his servant or any person put into possession of the

mortgaged property by the mortgagor or his agent

from the mortgaged property but with the

assistance of the Banking Court.

e) Under Sub-Section (9) of Section 15, the mortgagee

has been made bound to pay to the mortgagor any

surplus left from the sale proceeds of the

mortgaged property after the sale of the same.

f) Under Sub-Section (10) of Section 15, all the

mortgagees that have sold mortgaged properties

under Section 15 have been made bound to file

proper accounts of the sale with the Banking Court

to ensure transparency in the procedure of the sale

and adjustment of the sale proceeds. Failure to

comply with this requirement will not complete the

process of sale. More importantly, if fraudulent or

blatantly erroneous accounts are filed with the

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Banking Court, the Banking Court, on the objection

of the mortgagor, may even reverse the sale, as has

been done in various cases.

g) Under Sub-Section (11) of Section 15, the Banking

Court has been given exclusive power to hear and

decide all disputes relating to the sale of the

mortgaged properties under Section 15. Thus, the

mortgagor, in case of any mala fide action by the

mortgagee, may seek help from the Banking Court

at any stage of sale.

h) In certain conditions, Sub-Section (12) of Section 15

expressly provides the Banking Court the power to

restrain the sale or proposed sale of the mortgaged

property.

x) The tenth ground stated in the judgment is that “The

powers of the courts are curtailed and a bar is imposed

on the Court to restrain sale under the impugned

provision. The provision is impinging upon the power of

the Court, as enshrined in Articles 2-A & 175 of the

Constitution”.

It is incorrect that any insurmountable burden has been

placed on the powers of the courts to restrain or regulate

the sale. Under Sub-Section (11) of Section 15, the

Banking Courts have been given exclusive powers to hear

and decide all disputes relating to the sale of the

mortgaged properties under Section 15. Under Section

15(12), therefore, in certain conditions, Banking Courts

can grant stay against sale. But under Section 15(11),

short of stopping the sale, the Banking Courts have been

given exclusive and full powers to be the final arbiter and

regulator of all kinds of disputes and complaints of the

mortgagor. Banking Courts’ powers, in view of Section

15(11) are no where curtailed. Banking Courts can

21

regulate and give directions as to the venue and timing

and manner of sale and they may also strike down any

statutory notices that may have issued by the mortgagees

in case such notices are in violation of the conditions laid

down in Section 15(2)(3) and (4).

So far as restraint on sale is concerned, a sale can be

restrained if the mortgagor acts in good faith and is able

to demonstrate that his case falls within the criteria given

in Sub-Section (12) of Section 15 of the Ordinance of

2001. A requirement under a statute that some burden

may be placed on a litigant before he can avail a remedy

is not unknown to law. Under the revenue laws, it is not

an unknown requirement that certain percentage of the

revenue demand being challenged should be deposited

before the remedy is availed. Even in appeal against

money decrees, the Courts may require payment of the

disputed amount or a security. Under Section 15 (12), the

bona fide mortgagor has been given full liberty to seek

restraining orders from the Banking Courts if:

“i. It [Banking Court] is satisfied that no mortgage in

respect of the immovable property has been

created; or

ii. All moneys secured by mortgage of the mortgaged

property have been paid; or

iii. The mortgagor or objector deposits in the Banking

Court in cash the outstanding mortgage money.”

B) The learned Judges have reasoned that there was some

apparent conflict between Section 9 and Section 15 of the

Ordinance, 2001 and on the basis of this reasoning have found

it appropriate that Section 15 be struck down. It is submitted

that it is evident from the scheme of law that there was neither

any conflict nor any legislative oversight. In fact, Section 15

was meant to empower the Financial Institutions to bring about

22

sale only of mortgaged properties to the extent of “Mortgaged

Money” and on no other account whatsoever. The fact that

there has been no legislative oversight and that the legislature

expressed its intention after due deliberation is borne out by

the fact that Section 15 contains a non-obstantate clause set

out in sub-section 14.

“14. The provision contained in this section shall have effect notwithstanding anything contained in this Ordinance”.

In view of this clear affirmation of legislative intent, there could

be no sustainable basis to strike down Section 15 on the

ground of some alleged inconsistency or oversight.

C) The judgment shows that the honorable Court overlooked the

background in which Section 15 was promulgated, an omission

that is contrary to this honorable Court’s approach as clearly

stated in Zafar Ali Shah and Asfandyar Wali cases. In the latter

case, this honorable Court upheld Section 5(r) of NAB

Ordinance, 1999, which aimed at converting default of a purely

commercial contract into an offence, and that too with

retrospective effect, thus upholding the legislature’s attempt at

making a person liable to face prosecution and imprisonment

for a mere default of loan despite the fact that such contract

and such default might have occurred at a time when such

default was not an offence, all this only to protect Financial

Institutions from defaulters and to enable them to recover their

money. Section 5(r) of NAB Ordinance 1999 provides as

follows:

“‘Willful default’ a person is said to commit an offence of

willful default under this Ordinance if he does not pay, or

continues not to pay, or return or repay the amount to any

bank, financial institution……..”.

23

In the same judgment, the honorable Court refused even to

draw distinction between ‘willful’ and ‘non-willful’ default. This

being the clear approach of this honorable Court, how can a

statutory provision that merely entitles a Financial Institution to

sell, subject to strict requirements as set out in Section 15, a

property consciously, voluntarily and deliberately mortgaged

by a mortgagor in favor of that Financial Institution to secure

certain finance facility(ies) with express understanding that the

Financial Institution shall be entitled to sell the same in case of

his/her/its default, be held to be ultra vires and void? The ironic

thing is that, even before the judgment of this Apex Court in

Asfandaryar Wali case, a full bench of honorable Lahore High

Court, Lahore in an exhaustive judgment in the case titled Mrs.

Shahida Faisal v. Federation of Pakistan (PLD 2000 Lahore 508)

had itself upheld the offence of ‘willful default’ as introduced in

Section 5(r) of NAB Ordinance 1999 along with its retrospective

application, all on the basis of the need to interpret Section 5 (r)

in view of the unique background in which Financial Institutions

needed to be protected.

Unless, the impugned judgment is set aside and Section 15

upheld, the legal position that will remain will be that in case of

a default, while a bank may seek prosecution and imprisonment

of the customer, it may not transparently and after due process

sell the mortgaged property to recover its money because the

latter power is seen as unequal and harsh. More than 800

petitioners challenged the vires of Section 15 before honorable

Lahore High Court, Lahore and were able to stop the Financial

Institutions from selling their mortgaged properties. It was

anomalous that thorough out the pendency of those petitions

and operation of more than 800 injunctions granted by

honorable Lahore High Court, Lahore, while the Financial

Institutions could seek prosecution and imprisonment of all

those petitioners, they could not sell the mortgaged properties

24

of the petitioners because the Financial Institution’s power was

found to be too harsh.

D) This judgment appears to have been written on a premise that

powers given in Section 9 and Section 15 are of the same

category, that a Financial Institution when seeking to recover

its outstanding money by selling a mortgaged property under

Section 15 is performing some kind of judicial or quasi-judicial

function in which the customer/mortgagor is unfairly excluded

and that the way the Financial Institution applies the sale

proceeds to recover what in its view is its rightful claim

achieves the same kind of finality as if decreed by a Court. This

premise is not correct. Legislature routinely creates private

rights for exercise of which no recourse to Courts need be

made. Everyday, Financial Institutions holding DSCs (Defence

Saving Certificates) or SSCs (Special Saving Certificates) or

Shares under pledge recover their defaulted claims by selling

these securities. On any given day, millions of bails of cotton

and thousands of bags of sugar are held under pledge by

Financial Institutions who routinely sell these goods in case of

default by the borrowers. In case of shares too, most of the

shares now being part of the electronic trading system of CDC

(Central Depository Committee), every single day brokers

create and enforce thousands of pledges of such shares lying

in the CDC and apply the sale proceeds in accordance with

what they believe to be their rightful claim, passing surplus, if

any, to the pledgors/owners, all in manner of seconds. In none

of the above situations, the security holding lender is said to be

exercising a judicial or quasi-judicial function nor is it required

to prove its claim nor is the manner of the application of the

sale proceeds treated as having the same finality as if decreed

by a Court nor is it treated under law as acting as ‘judge in its

own cause’. When exercising these private powers, while the

holders of securities are not required to seek approval from

Court, it is always open to all the affected parties to seek

25

judicial determination of the lender’s claim either before, during

or after the liquidation of securities. The same is the position

when the beneficiary of a bank guarantee declares that there

has been a default in performance of the party whose

performance has been guaranteed by the bank obligations and

gets the guarantee encashed.

E) The learned Judges declined to give any weight to judicial

reasoning contained in certain Indian Judgments that had

upheld Section 69 of the Transfer of Property Act, 1882, (that

authorizes private sale of mortgaged property) on the basis that

there was some difference between Section 69 as it stands in

the Indian statute books and its shape in the Pakistani

legislation. However, the judgment identifies no difference in

the language that could furnish any basis for ignoring the

reasoning of the learned Judges of India as being irrelevant. In

fact, the Pakistani legislation lends greater strength for

enforcement of Section 69 than the Indian version. The

Pakistani version specifically empowers private sales by

scheduled banks [Section 69(1)(b)] while there is no such

power in the Indian statute. Furthermore, in the Pakistani law it

only visualizes that in case the Federal Government chose to

notify any conditions for exercise of the powers the same

would also be applicable. In other words if the Government did

not choose to notify any rules that could not mean that the

exercise of the power of sale could not be carried out. Here it

may be added that the Honourable Court has also stated that

addition of the proviso to Section 69(2) showed a statutory

inclination towards some form of additional regulatory

framework for exercise of powers of sale. In fact, Section 15 of

the Ordinance, 2001 itself contains the detailed statutory

framework to regulate a sale (and not merely through exercise

of any rule making power). It is, therefore, difficult to sustain

the reasoning that the language of the proviso of Section 69(2)

of the Transfer of Property Act could be a sufficient basis to set

at naught the clear legislative intent (strengthened by a non-

26

obstantate clause) reflected in Section 15 of the Ordinance,

2001.

The judgment does not describe as to how Federal Legislature

exceeded its law making powers by giving Financial

Institutions, through Section 15, another mode of liquidating

and converting into cash, the asset (in this case, immovable

property) that the customer may have given as security for

his/its payment obligations towards the financial institution.

F) The learned Judges, in the impugned judgment, have purported

to exercise the judicial power of “Reading Down” of a statutory

provision. It is submitted that the principle of “Reading Down” a

provision of law could not be used to totally strike down a

statutory provision in which the legislative intent was set out

with absolute clarity. Especially when, properly speaking, the

principle of ‘reading down’, as enunciated by common law

judgments is not aimed at striking down a statutory provision

but to seek an interpretation of various provisions in a manner

that allows them to exist and operate in a harmonious manner.

G) That under the settled principles of ‘Judicial Review’, while

considering the vires of any statute or provision of law within

the touchstone of the Constitution, it is incumbent on the

constitutional court to objectively consider all the prevailing

circumstances/background that necessitated such statute or

provision of law. This Court in its celebrated judgment reported

at PLD 2001 SC 607, duly considered all the relevant

facts/circumstances while determining the vires of the offence

of ‘wilful default’ under Section 5(r) of NAB Ordinance 1999.

While declaring S.15 as void the learned judges of Honorable

High Court of Lahore could not appreciate the entire back

ground which necessitated the promulgation of Recovery

Ordinance 2001, specially the fact that there were huge bank

defaults of billions of rupees and the entire banking sector in

general and national economy in particular were suffering huge

losses.

27

H) While declaring Section 15 to be an invalid piece of legislation

the learned judges failed to appreciate that there is a

presumption in favor of the validity of a statute and courts of

law have to presume that the particular law is intra vires and

not ultra vires. It is also to be presumed that the power

conferred shall be exercised for the purpose for which it has

been conferred and shall be exercised reasonably. The

presumption is in favor of the constitutionality of an enactment

and the burden is upon him who questions its validity to show

that there has been a transgression of constitutional principles.

I) The entire judgment is based on an underlying assumption that

exercise of power of sale under section 15 of the Ordinance,

2001 meant that a Financial Institution was being a “judge in its

own cause”. The rule that no body can be a judge in its own

case means that if a person is vested with any judicial powers,

he cannot hear a case in which he has some interest. The rule

never meant that a person was precluded from himself

exercising any rights that were made available to him under the

law. As submitted earlier, the power to sell the pledged goods

has never been taken by courts to be an act of being a judge in

one’s own cause. Section 69 of the Transfer of Property Act has

never been held to be void.

J) From the foregoing submissions, it can be seen that no material

was available with the Honourable Court to strike down Section

15 of the Ordinance, 2001 on the ground that it was not

sustainable under the Constitution. No case had been made out

to declare this section void on the touch-store of Articles 2-A, 3,

4, 9, 23, 24, 25 and 175 of the Constitution. It is further

submitted that in case a need was felt to further regulate the

exercise of powers u/s 15 it was always possible for the Court

to suggest remedial measures in the same manner as in which

the Honourable Supreme Court of Pakistan chose to do in the

case of Khan Asfandyar Wali (PLD 2001 SC 607). The Ordinance

2001 itself visualizes, in Section 25, that the Federal

Government, by notification in the official gazette, could make

28

rules for carrying out the purposes of the Ordinance. In fact, the

major part of the Code of Civil Procedure, 1908 itself comprises

Rules and Orders framed under the rule making powers u/s 121

to 131 CPC. The rules that were originally enacted along with

the CPC are themselves amenable to amendments by the

Honourable High Courts with approval of the prescribed

Government. There was therefore no justification for striking

down Section 15.

PRAYER: On the basis of the submissions made above, it is respectfully

prayed that this Honourable Court may be pleased to allow leave to

the Petitioner to file appeal against the impugned judgment dated

23.12.2008 passed by the Honourable Lahore High Court, Lahore and

that the appeal be accepted, the impugned judgment/order be set-

aside and this Honourable Court may be pleased to declare that

section 15 of the Financial Institutions (Recovery of Finances)

Ordinance, 2001 is a valid piece of legislation.

The Petitioner also prays for any other relief to which this

Honourable Court may find the Petitioner to be entitled in the interest

of law, justice and equity in the facts and circumstances of the case.

Drawn & Filed by

Muhammad Ahmed Zaidi

Advocate-on-Record

CERTIFICATE:

Certified as per instructions that this is the first Petition against the impugned judgment in this august Court on behalf of the petitioner.

29

Dated: 21-01.2009 ADVOCATE-ON-RECORD

Note. Mr. Mohammad Akram Sheikh, Senior Advocate will appear on behalf of the Petitioner Bank.

ADVOCATE-ON-RECORD

30

IN THE HON’BLE SUPREME COURT OF PAKISTAN (Appellate Jurisdiction)

CMA No. ___________/2009 In

CPLA No._______________/2009

The National Bank of Pakistan

…Petitioner

Versus SAF Textile Mills Limited, and another

…Respondents

APPLICATION UNDER ORDER XXXIII RULE 6 OF THE SUPREME COURT RULES, 1980 FOR SUSPENSION OF THE OPERATION OF THE IMPUGNED JUDGMENT DATED 23-12-2008

Respectfully Sheweth:-

FACTS OF THE CASE 1. That the Petitioner is a statutory body/corporation established

under the National Bank of Pakistan Ordinance 1949, having its

head office at I.I. Chundrigar Road, Karachi and a branch at 69/2

Abid Majeed Road, Lahore Cantt. It is a financial institution in

terms of Section 2(a) of the Ordinance of 2001. This Petition is

being filed through Mr. Javed Muhammad Iqbal Uddin, who is a

principal officer of the Petitioner Bank and competent to file

this Petition and to do all acts necessary or incidental for

proper prosecution of the case vide power of attorney in his

31

favor being well conversant with the facts of the case and

having signed and verified the same.

2. (a) This petition seeks leave to appeal against

judgment/order passed by the Honourable Lahore High

Court, Lahore on 23.12.2008 that have struck down

Section 15 of the Ordinance of 2001 under which financial

institutions had been empowered to bring mortgaged

properties to sale by following the procedure set out in

that Section.

(b) The Ordinance of 2001 had been promulgated in the year

2001. It is the final piece of legislation in a series of

statutes that were enacted, from time to time, to facilitate

recovery of amounts owed to various financial

institutions by their customers. Prior to these legislative

measures, all financial institutions (excepting a few

statutory corporations such as IDBP etc.) could proceed

for recovery of stuck up loans only by filing recovery

suits in the ordinary civil Courts that followed the general

procedure of civil litigation visualized under the Code of

Civil Procedure, 1908. However, since, very often, the

legal procedures were abused by the

customers/defendants to delay recoveries, a need was felt

to create special laws and special Courts to facilitate

recovery of amounts owed to the financial institutions.

The first statute in this context was the Banking

Companies (Recovery of Loans) Ordinance, 1979. It was

followed by Banking Tribunals Ordinance, 1984 and

thereafter by the Banking Companies (Recovery of Loans,

Advances, Credits and Finances) Act, 1997.

(c) However, even after the promulgation of above special

banking laws and establishment of special banking

Courts, the banks’ default rose to as high as Rupees. 356

32

Billion. This disturbing condition of banking sector and

the need to take extraordinary remedial measures for the

same was even taken as one of the grounds for validating

the military takeover of October 1999 by the Apex Court in

its judgment titled as Zafar Ali Shah v. Pervaiz Musharraf

and reported as PLD 2000 SC 869 at 1217.

It was in the above background that the Ordinance of

2001, which replaced the Banking Companies (Recovery

of Loans, Advances, Credits and Finances) Act, 1997 and

that gave powers of direct sale of mortgaged properties to

the financial institutions, was promulgated.

d) A distinctive feature of the Ordinance of 2001 was that it

empowered financial institutions to sell mortgaged

properties without intervention of Court subject to the

strict compliance of procedure set out in Section 15 of the

Ordinance of 2001. Briefly the procedure required that in

case any money secured by a mortgage (hereinafter the

“Mortgage Money”) was in default, two successive

demand notices for payment of outstanding Mortgage

Money within 14 days and, thereafter, a final demand

notice for payment of outstanding Mortgage Money within

30 days had to be served on the mortgagor (and any other

person having any interest therein). In case the

outstanding Mortgage Money was not paid as demanded

under said three demand notices, the financial institution

was empowered to sell the mortgaged property by public

auction after advertising the sale, in the prescribed

manner, in English and Urdu newspapers having wide

circulation in the area where the mortgaged property is

situated. On the sale having taken place, the financial

institution was required to file proper accounts relating to

the said sale in the Banking Court within 30 days of the

sale. Any dispute relating to the sale could be challenged

33

under Sub-Section (11) of Section 15 the Ordinance of

2001. Banking Court could also grant an injunction

restraining the sale provided:

(i) it was satisfied that no mortgage in respect of the

immovable property had been created; or

(ii) all moneys secured by mortgage of the mortgaged

property had been paid; or

(iii) the mortgagor or the objector deposited in the

Banking Court in cash the outstanding Mortgage

Money.

3. That the Respondent created mortgage over his/her/its

immovable property in favor of the Petitioner to secure the

payment obligations under certain finance facility(ies) that

was/were availed from the Petitioner.

4. That the Respondent defaulted in its payment obligations

towards the Petitioner in respect of the said finance facility(ies).

5. That the Petitioner decided to liquidate the security by selling

the mortgaged property(ies) under Section 15 and thus initiated

the strict set of formalities that it was required to meet under

Section 15.

6. That the Respondent instead of paying the Petitioner, getting

the mortgage over the mortgaged property redeemed or to

settle the loan, challenged the vires of Section 15 under Article

8 of the Constitution of Pakistan, 1973 before the honorable

Lahore High Court, Lahore at Lahore.

7. That this petition was heard, along with a number of other

constitutional petitions raising the same legal issues, by an

honorable Full Bench of the Lahore High Court, Lahore which,

by its judgment announced on 23-12-2008, struck down Section

15 of the Ordinance of 2001 as being contrary to the

34

Constitutional scheme and, therefore, void. It is submitted that

the vires of Section 15 of the Ordinance of 2001 had earlier

been challenged before the honorable Balochistan High Court

also, in the case titled as Sh. Abdul Sattar Lassi Vs. Federation

of Pakistan and Others which, vide its judgment delivered on

27-7-2006, [reported as 2006 CLD 18], held that Section 15 was

consistent and in accordance with the Constitution of the

Islamic Republic of Pakistan, 1973.

8. That the Petitioner feels aggrieved by the impugned judgment

delivered by the honourable Lahore High Court, Lahore on 23-

12-2008 and prays that the same be set aside on the following

grounds amongst other:

G R O U N D S

A) The impugned judgment is against the fundamental principle

that all laws should be deemed to have been validly enacted

and that a very heavy burden was cast on any person

challenging their validity. In the present case, Section 15 of the

Ordinance, 2001 has been struck down on grounds that it failed

to fulfill constitutional requirements. It is submitted that the

impugned judgment is based on grounds and reasoning that

cannot be sustained if subjected to correct legal analysis. The

judgment is based on ten specific grounds set out in its

paragraph 29. It is respectfully submitted that if a closer

analysis is made of these grounds, not a single ground

provides sufficient material to strike down the legislation that

had been challenged. These grounds are discussed in the

paragraphs that follow.

(i) The first ground stated in the judgment is that “No

procedure is provided to be adopted for public auction”.

It is respectfully submitted that a clear procedure is set

out in sub-section 4 of Section 15 of the Ordinance, 2001.

It gives the mode of advertising a sale, and the contents

of the notice of sale. As far as the mode of conducting the

35

actual auction is concerned, the word “auction” is a term

of art and the procedures that are followed are already a

matter of knowledge in the public domain.

Section 15(11) of the Ordinance of 2001 provides for

resolution of all disputes relating to the sale. Thus, any

person having any grievance regarding the procedure or

manner in which the public auction may have been

conducted by a Financial Institution may approach the

Banking Court, which will examine and decide the

objection of the customer/mortgagor on the touchstone of

procedure given in Code of Civil Procedure, 1908 as

provided in Section 7(2) of the Ordinance of 2001.

ii) The second ground stated in the judgment is that “The

provision is silent as to the manner of fixing reserve

price”.

It is submitted that there is no established principle of law

that in any sale of property there must be a reserve price,

as a fundamental legal requirement. Even under the Code

of Civil Procedure, 1908, in which the format of

Proclamation of sale is suggested in Order 21 Rule 66,

there is no requirement that there must always be a

reserve price. Whether or not there should be a reserve

price is purely a matter of discretion to be exercised,

when terms of proclamation of sale are to be drawn up.

iv) The third ground stated in the judgment is that “The

Financial Institution is conferred with the authority to sell

and itself purchase the mortgaged property, transfer the

same and get the sale deed registered in the name of

purchaser. The omnibus powers of the Financial

Institution are also against public policy. Financial

Institution by virtue of impugned provision becomes the

buyer, the seller and the registering or transferring

authority. Unbridled powers in the hands of the

mortgagee to sell the property, purchase the same and

get it transferred in its name, by all means is unequal

36

treatment and the rights of mortgagee are preferred over

the interest of mortgagor. The Financial Institution in this

exercise sits as judge of its own cause”.

It is submitted that this ground is not sustainable.

a) Under Section 15 of the Ordinance of 2001,

Financial Institutions may not simply purchase

outright the property that they want to be sold. First,

Financial Institution has to follow the whole process

of public auction transparently by issuing three

statutory notices and thus giving the mortgagor

right to redeem the mortgage, publish public

auction notices in the newspapers, then conduct

public auction and receive bids etc. Only after this,

the Financial Institution will become entitled, if it so

desires, to match the highest bid received and only

then it may purchase the property at the price that

must be equal to the highest bid that it may have

received in open auction.

b) It was also not correct to say that while executing

the Sale Deed, a Financial Institution becomes the

‘registering authority’. The registering authority

would always remain the Registrar of Documents

under the Registration Act, 1908.

c) The power of sale is not unbridled. The sale has to

be conducted in a transparent manner as given in

Section 15 and proper accounts have to be

submitted to the Court under Section 15(1) of the

Ordinance of 2001. If the Financial Institutions

seeks to conduct a sham auction without making

the best effort to obtain the highest price for the

property being sold, the mortgagor has always the

right to object to it in Banking Court under Section

15 (11).

37

The argument that there is any inequality between the

mortgagor and the mortgagee does not take into account

the legal relationship between the mortgagor and

mortgagee. According to the Transfer of Property Act, 58

the word ‘mortgage’ has been defined as transfer of

interest in the specific immovable property’. After

creation of mortgage, all that remains in the hand of the

mortgagor property, is only the ‘equity of redemption’

and, the right to receive whatever remains surplus to the

claim of the mortgagee after sale of the property. The

Mortgagee realizes only its own security, on failure of the

mortgagor to redeem. There can be no question of

equality between the mortgagor and mortgagee. Under

Section 15, the mortgagee is entitled to sell the property

only after giving the mortgagor ample notices

opportunities to get the property redeemed. Customers

routinely borrow money from banks on the security of

pledge. In case of pledge exactly the same kind of right is

exercised as under Section 15 i.e. sale of secured

property on failure to pay after Notice. And yet, the courts

have never held that when the pledgee is proceeding to

sell the pledged goods the pledgor and the pledgee are in

unequal position or that pledgee is acting as a judge in its

own cause.

iv) The fourth ground stated in the judgment is that “A loan,

which is also secured by pledge, is to be recovered from

sale of the pawner’s pledged goods. The pawnee can

legally recover its debt only when such pawnee is in a

position to deliver back or return the pledged goods.

Financial Institution through impugned provision, can

recover the debts through sale of mortgage property,

even when the Financial Institution is unable to deliver

the pledged goods.”

38

It is difficult to understand the exact reasoning involved.

The relevant principle is that a pledgee must be in a

position to return the pledged goods if the pledgor

desires to redeem the pledge. In the present case the

procedure visualizes that three notices would be served

on the mortgagor giving him an opportunity to redeem the

mortgage. Evidently, the mortgaged property would

always remain available for redemption if the mortgagor

chooses to do the same till such time that the auction has

taken place. It is not at all the case that financial

institutions could not be in a position to make the

property available for redemption, if the mortgagor so

chooses before the sale has been concluded. In fact, even

in the case of a pledge, the option to redeem the pledge

would be available only till such time that sale of pledged

goods had been concluded. It is, therefore, not the case

that the Financial Institution would not be able to make

the property available if the mortgagor desires to redeem

after the statutory notices.

It is also possible that the reasoning was as follows: ‘if a

loan is secured by a pledge and also by a mortgage, then

the lender may not sell the mortgaged property in case it

no longer holds pledged goods because perhaps they

have been lost or destroyed etc.’

If above is the reasoning, then again it is not sustainable

because:

Firstly, a loan, which is secured by more than one

securities (e.g. pledge, mortgage, lien on foreign currency

account etc.), can be legally recovered by

liquidating/converting into cash either one or all of them

in case any amount remains outstanding even after the

liquidation/converting into cash of one security.

Secondly, even where the pledgee is, due to any reason

whatsoever, not in position to return the pledged goods

39

to the pledgor then the pledgor may sue the pledgee for

not returning the pledged goods. But this in itself will not

affect the lender’s right to sell mortgaged property under

Section 15.

v) The fifth ground stated in the judgment is that “The

impugned enactment prescribes the mechanism of

recovery from mortgagor and principal borrower but is

silent about recovery from Financial Institution or its

obligation to pay. Both the parties are not treated equally

which is against the spirit of articles 4 & 25 of the

Constitution”.

The reasoning of the Honourable Court appears to based

on some misunderstanding that the remedies provided in

Section 9 and Section 15 of the Ordinance of 2001 are of

the same category, and because they are of the same

kind, while under Section 9, both the borrower and lender

may claim money from each other, in Section 15, only the

Financial Institution can. The completion of formalities by

a Financial Institution to sell mortgaged properties in

case of default is not a judicial or quasi-judicial process

of adjudication of claims. It is merely a power that the

legislature in its wisdom found it fit to give to Financial

Institutions to enable them to convert the security

(mortgage over immovable property) into cash by strictly

following a stringent set of formalities for selling the said

property through public auction.

Exercise or non-exercise of Section 15 powers by

Financial Institutions does not in any way affect or impair

either the Financial Institution or the customer’s right to

claim through Banking Court any money from the other

party that they may be entitled to.

Sub-Section (1) of Section 9 of the Ordinance of 2001

provides as follows:

40

“Where a Customer or a Financial Institution commits or

defaults in fulfillment of any obligation with regard to any

finance, the Financial Institution or, as the case may be,

the Customer may institute a suit in the Banking

Court……..”.

Section 15 powers are therefore not in substitution of the

parties’ right to claim money from each other through

Banking Court under Section 9. Section 15 applies only to

the sale of the mortgaged properties by the mortgagees

for recovery of outstanding Mortgage Money. The

Financial Institution would have to account for the

proceeds of the sale. In case the Financial Institution still

needs to file a recovery suit, the amount already

recovered under Section 15 would go towards reducing

its claim.

Section 15(13) itself clarifies this position as follows:

“The rights and remedies under this section are in addition to, and not in lieu of, any other rights or remedies a financial institution may have under this Ordinance.”

Also, the question of inequality does not arise here as the

concept of providing any right exclusively to a certain

class of persons vide a statutory provision is not new to

legislative enactments and have also been held to be

valid by superior courts in Pakistan and abroad.

Despite the above, further submissions on this ground

are as follows:

a) The very name of the Ordinance of 2001 (i.e.

Financial Institutions (Recovery of Finances)

Ordinance 2001) makes the intention of the

legislature in promulgation of this ordinance

abundantly clear.

41

b) Even a mortgagee (i.e. a Financial Institution)

cannot recover any money/amount under Section 15

over and above the Mortgage Money and for the

recovery of the same it shall have to file a separate

suit under Section 9 of the Ordinance of 2001.

As far as recovery of any outstanding amount by the mortgagor and/or the principal borrower from the Financial Institution or vice versa is concerned, a clear procedure for the same has been given in s.9 of Ordinance of 2001.

c) Further, in case a Financial Institution has already

received all the money/amount that it is entitled to

receive and is still proceeding to sell the mortgaged

property, the mortgagor can challenge it under Sub-

Section (12) of Section 15 of the Ordinance of 2001,

approach the Banking Court and obtain an

injunction restraining the sale or proposed sale of

mortgaged property on the ground that ‘all moneys

secured by mortgage of the mortgaged property

have been paid’.

vi) The sixth ground stated in the judgment is that “A time

barred debt can be recovered under the impugned

provision and valuable rights of the borrower are

snatched, smothered and stymied, which have accrued to

the customer with the flux of time. Snatching away of

such rights is against the mandate of Articles 4, 23 and 24

of the Constitution”.

This reasoning is contrary to established principles of

law. The law of limitation only provides for a time frame

for seeking access to courts after a person acquires a

cause of action. It is an established principle of law that

limitation does not destroy the right but only bars a

remedy that requires intervention of the court. The entire

system of law is structured around self help remedies as

42

well as remedies requiring support of judicial powers.

Section 176 of the Contract Act, visualizes a self help

remedy allowing a pledgee to bring the pledged goods to

sale, privately. A bank having funds of the debtors in its

hands can exercise the right of “set off” without the need

of intervention of the court. Similarly, a Bank holding

securities can bring them to sale under a power of sale.

Even otherwise, there has hardly been a case in which

Section 15 has been invoked, after period of limitation for

enforcement of a mortgage had expired. Limitation period

for enforcement of a debt is only 3 years, while for

enforcement of a mortgage it is 12 years from accrual of a

cause of action.

vii) The seventh ground stated in the judgment is that “The

mortgagee can recover penalties, other charges and

damages without any proof thereof, which is exploitative

on its part and a violation of Articles 2-A, 3 and 4 of the

Constitution”.

a) It is incorrect that a Bank can recover any money

that would not constitute the “Mortgage Money”. If

any attempt is made to bring the property to sale for

recovery of any amount not secured by the

mortgage or which cannot, otherwise, be claimed,

the mortgagor can challenge the same under sub-

section (12) of Section 15 of the Ordinance, 2001. A

Financial Institution would also be accountable for

any unjustified recovery since under sub section

(10) it must render proper accounts and under sub

section (9) only rightful dues under the mortgage

are available for distribution between the

mortgagees, and the surplus amount has to be paid

over to the mortgagor. The mortgagor could also

file a suit under Section 9 for recovery of amount

that it may be entitled to claim.

43

b) Under Section 15, mortgagee may only recover what

it is entitled to recover under their arrangement with

the mortgagor. According to the language used in

Section 15, the mortgagee can only recover

‘Mortgage Money’ and no amount other than that.

Section 15(1)(b) defines the ‘Mortgage Money’ as

follows:

“‘Mortgage Money’ means any finance or other amounts relating to a finance, penalties, damages, charges or pecuniary liabilities payment of which is secured for the time being by the document by which the mortgage is effected or evidenced, including any Mortgage Deed or Memorandum of Deposit of Title Deeds.”

The above definition of the ‘Mortgage Money’

clearly indicates that even the mortgagee cannot

recover penalties, other charges and damages if it

is not entitled to do so by the mortgagor through

mortgage documents that the mortgagor may have

executed at the time of creation of mortgage.

Even otherwise, it is mandatory upon the

mortgagees to file ‘proper accounts of the sale’ in

the Banking Courts within 30 days of the sale to

ensure transparency of the sale and adjustments of

the sale proceeds receive thereof.

c) Section 15 does not in any way protect a Financial

Institution from any claim from the mortgagor to

hold it accountable for having recovered any

amount that it was not entitled to recover or to

support which, it has no proof, and regarding its

application and treatment of the sale proceeds, the

Financial Institution is required to submit proper

accounts in the Banking Court and it is also

44

required to pay any surplus amount to the

mortgagor.

viii) The eighth ground stated in the judgment is that “The

mortgaged property is auctioned for recovery of an

amount, which is unascertained and undetermined.

Financial Institution can sell the mortgage property

without proving that the mortgage was created for the

loan sought to be recovered through sale or it relates to

some other loan between the same parties. The powers of

the Financial Institution are clearly violative of articles 2-

A, 3, 4, 23 and 24 of the Constitution”.

It is incorrect that any property can be sold as stated in

this ground. If a Financial Institution seeks to sell the

property to recover an amount which was not secured on

the property, or which related to some other transaction,

such attempt could be restrained by seeking an injunction

under Section (12) of Section 15. It is clearly stated that a

restraining order may be issued if the court is satisfied

that no mortgage in respect of the immovable property

had been created. As regards any amount being

unascertained and undetermined, sub-section (12) of

Section 15 of the Ordinance, 2001 permits the mortgagor

or the objector to deposit in the Banking Court any

amount actually owed.

ix) The ninth ground stated in the judgment is that “The

impugned provision has failed to save the borrower from

malafide action of the lender, which offends articles 2-A,

3, 4 & 9 of the Constitution”.

It is not correct that Section 15 excludes protection to the

mortgagor against mala fide action of the Financial

Institution. Section 15 does not provide any immunity to

the Financial Institutions from any criminal or civil action

that the borrower/mortgagor may be entitled to bring

because of any mala fide exercise of Section 15 powers.

There are often provisions in statutes requiring a certain

45

income tax commissioner or sales tax commissioner or

any other government officer or any private person to act

in a certain manner or to follow a certain procedure. All

those cannot be declared illegal and void simply because

the statute does not formally spell out provisions

protecting the potential affected person (e.g. income tax

payer) from any mala fide exercise of power. Any person

who is required to act in a certain manner will have to act

in that manner otherwise that person may have to face

civil or criminal action. This ground would have been

relevant if Section 15 had sought to give a blanket

immunity to Financial Institutions from any mala fide

exercise of their power under that power. But no such

protection has been given.

In addition to above, it seems that the legislature was

extraordinarily careful in safeguarding the interest of the

innocent mortgagors from any mala fide actions of the

mortgagees. Some of the examples of the safeguards are

as follows:

a) Under Sub-Section (2) of Section 15 lays down a

certain set of very stringent requirements that have

been introduced to safeguard the interest of the

mortgagor to be complied with by a mortgagee

before selling any mortgaged property under

Section 15. These include sending three different

demand notices, thereby giving in aggregate almost

a two months time period to the mortgagor for

settlement and payment of outstanding Mortgage

Money.

b) Under Sub-Section (4) of Section 15, the mortgagee

has been made bound to publish notice of sale of

the mortgaged property in two newspapers (English

46

& Urdu) widely circulated in the province where the

mortgaged property is situated.

c) Under Sub-Section (4) of Section 15, the mortgagee

is bound to sell the mortgaged property through

open Public Auction thus ensuring transparency.

d) Under Sub-Section (6) of Section 15, the mortgagee

selling any mortgaged property under Section 15

cannot itself evict or dispossess the mortgagor or

his servant or any person put into possession of the

mortgaged property by the mortgagor or his agent

from the mortgaged property but with the

assistance of the Banking Court.

e) Under Sub-Section (9) of Section 15, the mortgagee

has been made bound to pay to the mortgagor any

surplus left from the sale proceeds of the

mortgaged property after the sale of the same.

f) Under Sub-Section (10) of Section 15, all the

mortgagees that have sold mortgaged properties

under Section 15 have been made bound to file

proper accounts of the sale with the Banking Court

to ensure transparency in the procedure of the sale

and adjustment of the sale proceeds. Failure to

comply with this requirement will not complete the

process of sale. More importantly, if fraudulent or

blatantly erroneous accounts are filed with the

Banking Court, the Banking Court, on the objection

of the mortgagor, may even reverse the sale, as has

been done in various cases.

g) Under Sub-Section (11) of Section 15, the Banking

Court has been given exclusive power to hear and

decide all disputes relating to the sale of the

47

mortgaged properties under Section 15. Thus, the

mortgagor, in case of any mala fide action by the

mortgagee, may seek help from the Banking Court

at any stage of sale.

h) In certain conditions, Sub-Section (12) of Section 15

expressly provides Banking Court the power to

restrain the sale or proposed sale of the mortgaged

property.

x) The tenth ground stated in the judgment is that “The

powers of the courts are curtailed and a bar is imposed

on the Court to restrain sale under the impugned

provision. The provision is impinging upon the power of

the Court, as enshrined in Articles 2-A & 175 of the

Constitution”.

It is incorrect that any insurmountable burden has been

placed on the powers of the courts to restrain or regulate

the sale. Under Sub-Section (11) of Section 15, the

Banking Courts have been given exclusive powers to hear

and decide all disputes relating to the sale of the

mortgaged properties under Section 15. Under Section

15(12), therefore, in certain conditions, Banking Courts

can grant stay against sale. But under Section 15(11),

short of stopping the sale, the Banking Courts have been

given exclusive and full powers to be the final arbiter and

regulator of all kinds of disputes and complaints of the

mortgagor. Banking Courts’ powers, in view of Section

15(11) are no where curtailed. Banking Courts can

regulate and give directions as to venue and timing and

manner of sale and they may also strike down any

statutory notices that may have issued by the mortgagees

in case such notices are in violation of the conditions laid

down in Section 15(2)(3) and (4).

So far as restraint on sale is concerned, a sale can be

restrained if the mortgagor acts in good faith and is able

48

to demonstrate that his case falls within the criteria given

in Sub-Section (12) of Section 15 of the Ordinance of

2001. A requirement under a statute that some burden

may be placed on a litigant before he can avail a remedy

is not unknown to law. Under the revenue laws, it is not

an unknown requirement that certain percentage of the

revenue demand being challenged should be deposited

before the remedy is availed. Even in appeal against

money decrees, the Courts may require payment of the

disputed amount or a security. Under Section 15 (12), the

bona fide mortgagor has been given full liberty to seek

restraining orders from the Banking Courts if:

“i. It [Banking Court] is satisfied that no mortgage in

respect of the immovable property has been

created; or

ii. All moneys secured by mortgage of the mortgaged

property have been paid; or

iii. The mortgagor or objector deposits in the Banking

Court in cash the outstanding mortgage money.”

B) The learned Judges have reasoned that there was some

apparent conflict between Section 9 and Section 15 of the

Ordinance, 2001 and on the basis of this reasoning have found

it appropriate that Section 15 be struck down. It is submitted

that it is evident from the scheme of law that there was neither

any conflict nor any legislative oversight. In fact, Section 15

was meant to empower the Financial Institutions to bring about

sale only of mortgaged properties to the extent of “Mortgaged

Money” and on no other account whatsoever. The fact that

there has been no legislative oversight and that the legislature

expressed its intention after due deliberation is borne out by

the fact that Section 15 contains a non-obstantate clause set

out in sub-section 14.

49

“14. The provision contained in this section shall have effect notwithstanding anything contained in this Ordinance”.

In view of this clear affirmation of legislative intent, there could

be no sustainable basis to strike down Section 15 on the

ground of some alleged inconsistency or oversight.

C) The judgment shows that the honorable Court overlooked the

background in which Section 15 was promulgated, an omission

that is contrary to this honorable Court’s approach as clearly

stated in Zafar Ali Shah and Asfandyar Wali cases. In the later

case, this honorable Court upheld Section 5(r) of NAB

Ordinance, 1999, which aimed at converting default of a purely

commercial contract into an offence, and that too with

retrospective effect, thus upholding the legislature’s attempt at

making a person liable to face prosecution and imprisonment

for a mere default of loan despite the fact that such contract

and such default might have occurred at a time when such

default was not an offence, all this only to protect Financial

Institutions from defaulters and to enable them to recover their

money. Section 5(r) of NAB Ordinance 1999 provides as

follows:

“‘Willful default’ a person is said to commit an offence of

willful default under this Ordinance if he does not pay, or

continues not to pay, or return or repay the amount to any

bank, financial institution……..”.

In the same judgment, the honorable Court refused even to

draw distinction between ‘willful’ and ‘non-willful’ default. This

being the clear approach of this honorable Court, how can a

statutory provision that merely entitles a Financial Institution to

sell, subject to strict requirements as set out in Section 15, a

property consciously, voluntarily and deliberately mortgaged

by a mortgagor in favor of that Financial Institution to secure

50

certain finance facility(ies) with express understanding that the

Financial Institution shall be entitled to sell the same in case of

his/her/its default, be held to be ultra vires and void? The ironic

thing is that, even before the judgment of this Apex Court in

Asfandaryar Wali case, a full bench of honorable Lahore High

Court, Lahore in an exhaustive judgment in the case titled Mrs.

Shahida Faisal v. Federation of Pakistan (PLD 2000 Lahore 508)

had itself upheld the offence of ‘willful default’ as introduced in

Section 5(r) of NAB Ordinance 1999 along with its retrospective

application, all on the basis of the need to interpret Section 5 (r)

in view of the unique background in which Financial Institutions

needed to be protected.

Unless, the impugned judgment is set aside and Section 15

upheld, the legal position that will remain will be that in case of

a default, while a bank may seek prosecution and imprisonment

of the customer, it may not transparently and after due process

sell the mortgaged property to recover its money because the

latter power is seen as unequal and harsh. More than 800

petitioners challenged the vires of Section 15 before honorable

Lahore High Court, Lahore and were able to stop the Financial

Institutions from selling their mortgaged properties. It was

anomalous that thorough out the pendency of those petitions

and operation of more than 800 injunctions granted by

honorable Lahore High Court, Lahore, while the Financial

Institutions could seek prosecution and imprisonment of all

those petitioners, they could not sell the mortgaged properties

of the petitioners because the latter power was found to be too

harsh.

D) This judgment appears to have been written on a premise that

powers given in Section 9 and Section 15 are of the same

category, that a Financial Institution when seeking to recover

its outstanding money by selling a mortgaged property under

Section 15 is performing some kind of judicial or quasi-judicial

51

function in which the customer/mortgagor is unfairly excluded

and that the way the Financial Institution applies the sale

proceeds to recover what in its view is its rightful claim

achieves the same kind of finality as if decreed by a Court. This

premise is not correct. Legislature routinely creates private

rights for exercise of which no recourse to Courts need be

made. Everyday, Financial Institutions holding DSCs (Defence

Saving Certificates) or SSCs (Special Saving Certificates) or

Shares under pledge recover their defaulted claims by selling

these securities. On any given day, millions of bails of cotton

and thousands of bags of sugar are held under pledge by

Financial Institutions who routinely sell these goods in case of

default by the borrowers. In case of shares too, most of the

shares now being part of the electronic trading system of CDC,

every single day brokers create and enforce thousands of

pledges of such shares lying in the CDC and apply the sale

proceeds in accordance with what they believe to be their

rightful claim, passing surplus, if any, to the pledgors/owners,

all in manner of seconds. In none of the above situations, the

security holding lender is said to be exercising a judicial or

quasi-judicial function nor is it required to prove its claim nor is

the manner of the application of the sale proceeds treated as

having the same finality as if decreed by a Court nor is it treated

under law as acting as ‘judge in its own cause’. When

exercising these private powers, while the holders of securities

are not required to seek approval from Court, it is always open

to all the affected parties to seek judicial determination of the

lender’s claim either before, during or after the liquidation of

securities. The same is the position when the beneficiary of a

bank guarantee declares that there has been a default in

performance of the party whose performance has been

guaranteed by the bank obligations and gets the guarantee

encashed.

E) The learned Judges declined to give any weight to judicial

reasoning contained in certain Indian Judgments that had

52

upheld Section 69 of the Transfer of Property Act, 1882, (that

authorizes private sale of mortgaged property) on the basis that

there was some difference between Section 69 as it stands in

the Indian statute books and its shape in the Pakistani

legislation. However, the judgment identifies no difference in

the language that could furnish any basis for ignoring the

reasoning of the learned Judges of India as being irrelevant. In

fact, the Pakistani legislation lends greater strength for

enforcement of Section 69 than the Indian version. The

Pakistani version specifically empowers private sales by

scheduled banks [Section 69(1)(b)] while there is no such

power in the Indian statute. Furthermore, in the Pakistani law it

only visualizes that in case the Federal Government chose to

notify any conditions for exercise of the powers the same

would also be applicable. In other words if the Government did

not choose to notify any rules that could not mean that the

exercise of the power of sale could no be carried out. Here it

may be added that the honourable court has also stated that

addition of the proviso to Section 69(2) showed a statutory

inclination towards some form of additional regulatory

framework for exercise of powers of sale. In fact, Section 15 of

the Ordinance, 2001 itself contains the detailed statutory

framework to regulate a sale (and not merely through exercise

of any rule making power). It is, therefore, difficult to sustain

the reasoning that the language of the proviso of Section 69(2)

of the Transfer of Property Act could be a sufficient basis to set

at naught the clear legislative intent (strengthened by a non-

obstantate clause) reflected in Section 15 of the Ordinance,

2001.

The judgment does not describe as to how Federal Legislature

exceeded its law making powers by giving Financial

Institutions, through Section 15, another mode of liquidating

and converting into cash the asset (in this case, immovable

property) that the customer may have given as security for

his/its payment obligations towards the financial institution.

53

F) The learned Judges, in the impugned judgment, have purported

to exercise the judicial power of “Reading Down” a statutory

provision. It is submitted that by virtue of the principle of

“Reading Down” a provision of law could not be used to totally

strike down a statutory provision in which the legislative intent

was set out with absolute clarity. Especially when, properly

speaking, the principle of ‘reading down’, as enunciated by

common law judgments is not aimed at striking down a

statutory provision but to seek an interpretation of various

provisions in a manner that allows them to exist and operate in

a harmonious manner.

G) That under the settled principles of ‘Judicial Review’, while

considering the vires of any statute or provision of law within

the touchstone of the Constitution, it is incumbent on the

constitutional court to objectively consider all the prevailing

circumstances/background that necessitated such statute or

provision of law. This Court in its celebrated judgment reported

at PLD 2001 SC 607, duly considered all the relevant

facts/circumstances while determining the vires of the offence

of ‘wilful default’ under Section 5(r) of NAB Ordinance 1999.

While declaring S.15 as void the learned judges of Honorable

High Court of Lahore could not appreciate the entire back

ground which necessitated the promulgation of Recovery

Ordinance 2001 specially the fact that there were huge bank

defaults of billions of rupees and the entire banking sector in

general and national economy in particular were suffering huge

losses.

H) While declaring the Section 15 an invalid piece of legislation the

learned judges failed to appreciate that there is a presumption

in favor of the validity of a statute and courts of law have to

presume that the particular law is intra vires and not ultra vires.

It is also to be presumed that the power conferred shall be

exercised for the purpose for which it has been conferred and

shall be exercised reasonably. The presumption is in favor of

the constitutionality of an enactment and the burden is upon

54

him who question its validity to show that there has been a

transgression of constitutional principles.

I) The entire judgment is based on an underlying assumption that

exercise of power of sale under section 15 of the Ordinance,

2001 meant that a Financial Institution was being a “judge in its

own cause”. The rule that no body can be a judge in its own

case means that if a person is vested with any judicial powers,

he cannot hear a case in which he has some interest. The rule

never meant that a person was precluded from himself

exercising any rights that were made available to him under the

law. As submitted earlier, the power to sell the pledged goods

has never been taken by courts to be an act of being a judge in

one’s own cause. Section 69 of the Transfer of Property Act has

never been held to be void.

J) From the foregoing submissions, it can be seen that no material

was available with the Honourable Court to strike down Section

15 of the Ordinance, 2001 on the ground that it was not

sustainable under the Constitution. No case had been made out

to declare this section void on the touch-store of Articles 2-A, 3,

4, 9, 23, 24, 25 and 175 of the Constitution. It is further

submitted that in case a need was felt to further regulate the

exercise of powers u/s 15 it was always possible for the Court

to suggest remedial measures in the same manner as in which

the Honourable Supreme Court of Pakistan chose to do in the

case of Khan Asfandyar Wali (PLD 2001 SC 607). The Ordinance

2001 itself visualizes, in Section 25, that the Federal

Government, by notification in the official gazette, could make

rules for carrying out the purposes of the Ordinance. In fact, the

major part of the Code of Civil Procedure, 1908 itself comprises

Rules and Orders framed under the rule making powers u/s 121

to 131 CPC. The rules that were originally enacted along with

the CPC are themselves amenable to amendments by the

Honourable High Courts with approval of the prescribed

Governments. There was therefore no justification for striking

down Section 15.

55

It is, therefore, most respectfully prayed that this Hon’ble Court

may very graciously be pleased to suspend the impugned judgment

and its operation dated 23-12-2008 till the final disposal of the main

petition.

The Petitioner also prays for any other relief to which this

Honourable Court may find the Petitioner to be entitled in the interest

of law, justice and equity in the facts and circumstances of the case.

Drawn & Filed by

Muhammad Ahmed Zaidi

Advocate-on-Record

Note.

Mr. Mohammad Akram Sheikh, Senior Advocate will appear on behalf of the Petitioner Bank.

ADVOCATE-ON-RECORD