DARAB SHAH B.DALAL Versus MCB LTD.

ORDER

1. ANWARUL HAQ J. -This petition seeks leave to appeal against the: judgment of a Division Bench of the High Court of Sind & Baluchistan dated the 14th of May 1976 whereby an appeal filed by the petitioner against the judgment and decree passed by a learned Single Judge of that Court under Order XXXVII, rule 2 of the Code of Civil Procedure for the recovery of a sum of Rs. 4,22,559 from the petitioner was dismissed.

2. The suit was instituted by the Premier Bank Limited on the 30th of May 1974 on the basis of a pro-note bearing the date 20th of February 1971 followed by two acknowledgments of the petitioner dated the 8th of September 1972 and the 27th of January 1973 respectively. The petitioner applied for leave to defend the suit unconditionally on the ground that it was barred by time and the promissory note was not properly stamped. The learned trial Judge repelled these contentions, but granted conditional leave to defend on the ground that a large amount was involved. The petitioner was called upon to furnish a bank guarantee for the suit amount within three weeks.

3. The petitioner failed to furnish the necessary security, and instead filed a petition in the Supreme Court for special leave to appeal against the order of the learned trial Judge. This petition, bearing No. 29-R of 1975, was dismissed by the Supreme Court on the 13th of August 1975 holding that the High Court was right in rejecting the plea of limitation raised by the petitioner for the reason that the. two acknowledgments relied upon by the Bank brought the case within the - purview of section 19 of the Limitation Act, with the result that the suit was within time.

4. During the pendency of the suit, the commercial banks in Pakistan were Nationalised under the Bank Nationalisation Act, 1974, promulgated on the 11th of March 1974, but given retrospective effect from the 1st of January 1974. On the 25th of April 1975, the petitioner moved an application under order VII, rule' I1 of the Code of Civil Procedure for the rejection of the plaint on the ground that the Premier Bank Limited had ceased to exist on the promulgation of the Banks Nationalisation Act and, therefore, the suit could not proceed. The plaintiff, on the other hand, made an application under Order I, rule 10 read with section 151, C. P. C. for substitution of the name of the Muslim Commercial Bank Limited in place of the premier Bank Limited on the ground that the Premier Bank Limited bad been merged with the Muslim Commercial Bank Limited under the scheme framed by the Banking Council in terms of section 15 of the aforesaid Act. The learned trial Judge dismissed the petitioner's application, but granted that of the plaintiff.

5. The petitioner once again filed a petition for special leave to appeal in the Supreme Court to challenge this order of the trial Judge. ?his petition (bearing No. K-1974/75) was also dismissed by the Supreme Court by its order dated the 20th of February 1976. This Court held that the combined effect of sections 5(5), 15(1), 16(x) and 16(c) of the Banks Nationalisation Act was that the corporate status of the banks was not affected, and that their rights and obligations continued to subsist, and that the proceedings could be continued by the Muslim Commercial Bank Limited with which the Premier Bank Limited had been merged under the scheme framed in terms of section 15 of the Act. However, it was observed that this was only a tentative view, and the petitioner would not be precluded from agitating this issue in the final appeal, if any.

6. The main suit was then decreed by the learned Single Judge by his judgment dated the 4th of March 1976, since the conditional leave to defend was not availed of by the petitioner.

7. In the appeal before the Division Bench, the various pleas previously taken on behalf of the petitioner were re-agitated. It was contended that the learned trial Judge had erred in refusing to grant to the petitioner unconditional leave to defend the suit; that the suit was barred by time and that the suit was not competent after the Premier Bank Limited had been nationalised under the Banks Nationalisation Act, 1974. All these contentions were, however, repelled by the learned Judge of the Division Bench, and the petitioner's appeal was dismissed in limine.

8. Leave to appeal is sought on the following grounds:

(a) That the suit was not maintainable even by the Muslim Commercial Bank Limited after the Premier Bank Limited had been nationalised, as under Article 173 of the Constitution the assets of the Premier Bank Limited vested in the Federal Government on nationalisation, and the suit could, therefore, be maintained only in the name of the Federation as required by Article 174 of the Constitution and section 79 of the Code of Civil Procedure;

(b) That the suit was barred by time as the period of three years prescribed under Article 64-A of the Schedule to the Limitation Act for a summary suit under Order XXXVII. C. P. C. cannot be extended by the application of section 19 of the Limitation Act; and

(c) That the learned Judges of the Division .Bench should not have heard the appeal as they had previously dealt with this matter on two occasions, firstly with the question of granting leave to defend the suit, and secondly, for the disposal of the two applications made by the parties under Order 1, rule 10 and Order VII, rule 11, C. P. C. as mentioned earlier.

9. After hearing the learned counsel for the parties at some length we have formed the view that there is no merit in any of these submissions.

10. As to the maintainability of the suit, we have already stated that this point was previously agitated by the petitioner in Civil Petition No. 176/75, but his plea was rejected. It is true that the Court was careful to say that this was only a tentative finding and the petitioner was not precluded from agitating this point in the final appeal. We have accordingly once again examined the relevant provisions of the Banks Nationalisation Act, 1974, and we find that the view previously formed by this Court in this behalf was fully justified.

11. The relevant sections of the Act are sections 5, 15 and 16. They are reproduced here for facility of reference

12. "5. Transfer and vesting of ownership etc. of banks.-(l) The ownership, management and control of all banks shall stance transferred to, and vest in, the Federal Government on the commencing day.

(2) All shares in the capital of a bank held by persons other than the Federal Government, a Provincial Government, a corporation owned or controlled by the Federal Government or the State Bank shall stand transferred to, and vest in, the Federal Government on the commencing day, free of all trusts, liabilities and encumbrances.

(3) The vesting of any shares in the Federal Government under subsection (2) shall not affect the rights inter se of a shareholder and any other person who may have an interest in such shares and such other person shall be entitled to enforce his interest against the compensation awarded to the shareholder under section 6.

(4) The safety of all deposits in banks shall stand guaranteed by the Federal Government.

(5) The provisions of this Act and the vesting of the shares of the banks in the Federal Government thereunder shall not in any way affect the status of the banks as bodies corporate under the Companies Act, 1913 (VII of 1913).

15. Schemes for reorganisation of banks etc.-(1) The. Council may, in consultation with the State Bank and with due regard to the interest of the depositors, prepare a scheme for improving the management and operation of a bank or group of banks to serve the needs of development of the economy.

(2) A scheme prepared under subsection (1) may Inter alia provide for all or any of the following matters, namely:

(i) the reconstitution of a bank or a group of banks into a new bank registered under the Companies Act, 1913 (VII of 1913), or a Corporation incorporated under a Federal law, the amalgamation of two or more banks or the merger of one or more banks in another bank;

(ii) formulation or reformulation of memorandum or articles of association of a bank or reconstituted or amalgamated bank;

(iii) modification of the capital structure of a bank or reconstituted, or amalgamated bank;

(iv) additions to or deletions from the kind of business in which a bank may engage and the places where it may carry on its business; and

(v) changing the name of an existing bank or naming a reconstituted or amalgamated bank.

(3) A scheme prepared under subsection (1) shall be submitted to the Federal Government for approval and shall. after it has been approved by the Federal Government, with or without modification, be published in the official Gazette and shall take effect on such date, as may be specified therein.

16. ? Removal of doubts.-For the removal of doubts, it is hereby declared that

(a) all assets, rights, powers, authorities and privileges and all property, movable or immovable, cash balances, reserve funds, investments and all other rights and interests arising out of such property as were immediately before the commencing day in the ownership, possession, power or control of a bank, whether within or outside Pakistan, shat), unless other provisions are made for their predisposition in accordance with m scheme prepared under subsection (1) of section 15, continue to vest ? in that hank, and all borrowings, liabilities, including contingent liabilities, and obligations of a bank of whatever kind subsisting immediately before the commencing day shall , unless other provisions as aforesaid are made for their discharge or performance,, continue to be the borrowings, liabilities and obligations of that bank;

(b) all contracts, deeds, agreements, powers of attorney, other than those in favour of a person vacating his office under this Act, grant of legal representation and other instruments of whatever kind subsisting or having effect immediately before the commencing day to which a bank is a party or which are in favour of a bank shall be of as full force and effect against or in favour of a bank as they were immediately before the commencing day; and

(c) if, on the commencing day, any suit. appeal or other legal proceeding of whatever nature which is by or against the bank or to which the bank is a party is pending in any Court or before a tribunal or other authority, the same shall not abate, be discontinued or be, in any way, prejudicially affected by any provision of this Act."

13. It will be seen that even though under subsection (1) of section 5, the ownership, management and control of all the banks stands transferred to, and vests in, the Federal Government with effect from the commencing day, yet subsection (5) of the same section makes it clear that the provisions of this Act and the vesting of the shares of the banks in the Federal Government thereunder shall not in any way affect the status of the banks as bodies corporate under the Companies Act, 1913. Section 16 of the Act has further placed the matter beyond doubt by stipulating that all assets, rights, powers as well as liabilities shall continue to be those of the bank concerned and similarly, all contracts, deeds, agreements, powers of attorney etc. shall C be of full force and effect against or in favour of a bank as they were immediately before the commencing day, and pending legal proceedings shall continue without in any way being prejudicially affected by the provisions of this Act. In the face of these provisions it is difficult to accept the view that as a result of the nationalisation of the banks all contracts and litigation should be in the name of the Federation as required by Articles 172 and 174 of the Constitution a4 well as section 79, C. P. C. The Act under which the nationalisation has been undertaken, itself makes special provisions in this behalf, and we see no reason why they should not be given full effect. In this view of the matter, we would endorse the view taken in this behalf by a Division Bench of the former High Court of Sind & Baluchisian in Badruddin Mavani v. Messrs Commerce Bank Limited (P L D 1975 Kar. 182).

14. As to the locus standi of the Muslim Commercial Bank limited, the matter is covered by the scheme notified by the Banking Council on the 8th of April 1974 under section 15 of the Act regarding the reconstitution of the banks. It is not disputed that in this reconstitution the Premier Bank Limited has been merged with the Muslim Commercial Bank Limited, with the result that the latter has become a successor-in-interest of the Premier Bank Limited for all purposes, Including the present litigation. The learned trial Judge was, therefore, right in permitting the substitution of the Muslim Commercial Bank Limited in place of the original plaintiff.

15. On the question of limitation, we again have a previous order of this Court in Civil Petition No. 29-R of 1975 which was dismissed on the 13th of August 1975, holding that section 19 of the Act was applicable in vie of the two acknowledgments in writing made by the petitioner in favor of the plaintiff. This order would appear to be res judicata between the parties, and the petitioner cannot be permitted to reagitate the same point once again in the present proceedings.

16. However, learned counsel for the petitioner submitted that this order needed to be reviewed as it referred to Articles 158 and 159 of the Schedule to the Limitation Act, which were not directly relevant in this context, as the period of limitation in the present suit was governed by Article 64-A of the said Schedule. He further contended that there was authority for the view that section 19 was not applicable to a summary suit under Order XXXVII, rule 2 of the Code of Civil Procedure.

17. We do not think that in the present proceedings we can review an order made by this Court on a previous occasion, when that order has become final between the parties on the controversy in question, namely, the question of limitation. We have no doubt at all that reference tot' Article 158 and 159 is only a clerical error, as the controversy brought before the learned Judges in that petition clearly related to a suit governed by Article 64-A, and it was in this context that they expressed the view that the acknowledgments relied upon by the plaintiff brought the matter within purview of section 19 of the Limitation Act. We consider, therefore, that the question of limitation stands already decided by this Court in this case by its order dated the 13th of August 1975.

18. It is correct that the learned Judges composing the Division Bench which decided the petitioner's appeal had previously dealt with the case in their individual capacity, but they had not passed the final decree which was brought under appeal before them. It would perhaps have been more appropriate if the appeal had been placed before another Bench, but as the view taken by the learned Judges in the order under appeal on all the disputed questions is being upheld by us, this is not a fit case for being remanded for a rehearing of the appeal on this ground.

19. For the foregoing reasons, the petition fails and is hereby dismissed.

20. S. A. H. ?????????????????????????????????????????????????????????????????????????????????? Petition dismissed.