Messrs DADABHOY CEMENT INDUSTRIES LTD. Versus NATIONAL DEVELOPMENT FINANCE CORPORATION, KARACHI

MIAN MUHAMMAD AJMAL, J.‑‑-- By this common judgment we propose to dispose of Civil Petitions for Leave o Appeal Nos.2720 to 272 of 2001 as they have arisen out of the common judgment and involve identical questions of law and facts.

2. Facts are that in 1982, the respondent‑National development Finance Corporation (hereinafter to be called 1.D.F.C.) allowed several loan facilities to Messrs Dadabhoy Cement Industries Limited (hereinafter to be called D.C.I.L.) to the tune of Rs.584,065,920 and the petitioners were to repay Rs.1,013,066,026. The petitioner mortgaged its properties as a security of the loan. D.C.I.L. after allegedly making payment of the due amount filed Suit No.416 of 1.996 against the respondent for redemption ~f mortgaged properties. The respondent also filed Suit to.1430 of 1997 against the petitioner for the recovery of he allegedly outstanding amount. In Suit No.416 of 1996 fled by the petitioners, the parties filed an application finder Order XXIII, rule 3, C.P.C. for its disposal in terms if the compromise, which reads as under: --‑‑

"It is submitted on behalf of the parties in the above suit that pursuant to a Memorandum of Understanding dated 19‑12‑1997 (Annexure 'A') executed between Dadabhoy Cement Industries Limited ("D.C.I.L.") the plaintiff No.1 herein and N.D.F.C. the defendant a settlement has been arrived at including the dispute in the present suit encompassing all the disputes in relation to the accounting of various facilities provided by N.D.F.C. to D.C.I.L. and rescheduling/ restructuring of their loans/ facilities including the dispute in the present suit. The dispute involved in the present suit has been resolved on the following terms and conditions: ‑‑

(1) That it has been agreed between the parties that the interest‑based loan facilities and mark‑up‑based finance facilities specified in Annexure 'B' offered by N.D.F.C. to D.C.I.L. shall be treated as withdrawn and cancelled in all respect as if the said facilities as to each and every one of them was never offered by N.D.F.C. to D.C.I.L.

(2) That it has been agreed between the parties that out of the amounts from time to time paid by or for the account of D.C.I.L. to N.D.F.C. and received by N.D.F.C. up to 1‑9‑1997 on account of various interest‑based; term loan facilities as well as mark up based term finance facilities, an aggregate amount of Rs.948.10 million (Rs. nine hundred forty -eight million one hundred thousand only) received from D.C.I.L. (in cash, through adjustment' of certain loan amounts disbursements, amounts reimbursed by the local banks and Ra.10.36 million received from Aslan Development Bank) shall‑ be deemed to have been received and appropriated by N.D.F.C. in part payments of amounts owing from D.C.I.L. on account of the interest‑based term loan facilities and in payment of the mark‑up‑based term finance facilities provided to D.C.I.L.

(3) That on the basis of the appropriation as stated in para. 2 thereof, the account of interest‑based term loan facilities shall be deemed to be re‑stated, resulting in an. aggregate amount of Rs.717;000,000 (Rupees seven hundred seventeen million only) owing and payable in respect of the aforesaid facilities which shall be paid by D.C.I.L. to N.D.F.C. in the manner stated hereafter.

(4) That it is further agreed between the parties that the mark‑up‑based term finance facilities (with the exception of working capital facilities which is subject‑matter in Suit No.‑1430 of 1997 and for which a separate compromise application has .been moved) shall be deemed to have been settled and finally closed for all intents and purposes.

(5) That as a result of the settlement so arrived at between the parties D.C.L.L. is liable to pay to N.D.F.C. an aggregate amount of Rs.717,000,000 as on the effective date i.e. 1‑9‑1997 which D.C.I.L. has , agreed to pay to N.D.F.C. in the following manner.

(6) That on execution of the aforesaid Memorandum of Understanding dated 19‑12‑1997 D.C.I.L. has paid to N.D.P.C. the sum of Re. Two (2) millions and the balance of Rs.7,15,000,000 (Rupees seven hundred fifteen million only) payable on account of interest based term loan facilities shall, from the effective date i.e. 1‑9‑1997, bear interest @ 15% per annum on daily balance and on the basis of a 360 days year with quarterly rest until full payment of principal and interest is made to N.D.F.C.. The aforesaid sum of Rs.715,000,000 shall be payable by D.C.I.L. to N.D.F.C. within 15 years from the effective date i.e. 1‑9‑1997 in 60 (sixty) equal quarterly installments payable on or before let January, 1st April, 1st July and l at December in each calendar year together with interest accrued at the rate aforesaid up to the date of payment of each such installment as detailed in Annexure 'C' with the first such installment shall be payable on or before 1‑4‑1998.

(7) That in the event of default in payment of any installment, as agreed upon the entire principal and interest accrued thereon then remaining unpaid, shall become immediately due and payable by D.C.I.L. to N.D.F.C. without any notice. In such an event D.C.I.L. shall be liable to pay to N.D.F.C. an additional interest @ 4% per annum with semi annual rest on the entire amount of overdue principal, and interest in addition to the 15% interest per apnum on daily balances, as stated in para. 6 hereof:

(8) That it is agreed that the following shall constitute an event of default:

(i) If D.C.I.L. shall default in making any payment due to N.D.F.C. or shall be in breach of any provision of the said M.O.U. dated 19‑12‑1997 or of any agreement, as modified by the said. M.O.U., governing, any interest‑based term loan facility or of any compromise decree of Hon'ble Court or of any document creating or evidencing security in favour of N.D.F.C. whether alone or together with others for money owing from D.C.L.L to N. D. F. C.

(ii) If D.C.I.L. shall suffer any petition for its winding up to be filed or any resolution for its winding up to be passed or any decree for money to be passed or any receiver or administrator or manager to be appointed in respect of the business of D.C.I.L. or any of its assets on income in or over which N.D.F.C. has a security interest.

(iii) If in the opinion of N.D.F.C. any security held by it for the indebtedness of . D.C.I.L. is adversely petitioners were not maintainable. He submitted that the respondent has not charged any alleged extra‑interest mark‑up from the petitioners which has been admitted by them in para.5 (xii) of their Suit No.416 of 1996 stating that pursuant to the rescheduling of the agreement the respondent had added compound interest, additional interest and other charges in determining the principal amount due and payable by the petitioners. In such a situation, the allegation that extra‑interest/mark‑up has been charged is without any foundation. He urged that the compromise decree was passed in pursuance of the M.O.U. which was duly acted upon by the petitioners and in consequence whereof the petitioners paid 4 quarterly installments as enunciated in the compromise and thereafter they stopped payment of further quarterly installments as agreed upon and instead filed application under section 12(2), C.P.C. He submitted that the applications under section 12(2), C.P.C. of the petitioners were designedly filed with mala fide intention in order to delay the payment of the outstanding agreed amount and thus deserved to be dismissed with costs. .

6. We have heard the learned counsel for the parties and have gone through the material available on record. Obviously, the parties at their own free‑will end consent, entered into a compromise vide M.O:U. dated 19‑12‑1997 which was signed by the parties and their counsel and both the Suits Nos.416 of 1996 and 1430 of 1997 were disposed of in terms of the said compromise except para.7 thereof; which was substituted by the Court. The Court after verifying the signatures of the parties and their counsel, who admitted the execution of the compromise, examined the terms of compromise and found para.7 thereof to be unreasonable, as such, it was substituted and on its satisfaction that the compromise was voluntary and genuine, accepted the same with substituted para.7 and decreed the suit in terms thereof, which attained finality as it was not challenged in appeal. In pursuance of the compromise decree, the petitioners paid 4 quarterly installments but thereafter stopped payment and filed two applications under section 1), C.P.C. and on the other hand, the respondent filed two applications for the execution of the said decree.

7. As far the allegations that the compromise, decree was obtained by fraud, coercion and misrepresentation, the petitioners failed to substantiate the same as no articulars or details thereof had been given in their application under section 12(2), C.P.C. and mere allegation not supported by any material, would not invariably warrant inquiry or investigation in each case. It is for the trial Court to see whether the facts and circumstances of the case require further probe into the allegations or not. Where the ;Court finds that further inquiry is required, it would frame issues and record evidence of the parties and if it is of toe opinion, that no inquiry is required, it can dispense with the same and proceed to decide the application. So, it is not incumbent on the trial Court to frame issues in each and every case but it depends upon the facts and circumstances of each case. The argument that the respondent by adding further interest/mark‑up on the amount on which interest/mark‑up had already been paid, played fraud, has no substance, for, this fact was already in the knowledge of the petitioners as they had agreed to pay the same on rescheduling of. the outstanding amount, which has been admitted by the petitioners in their Suit No.416 of 1996, as such, they being the privy to the rescheduling of the loan, cannot turn around to say that further mark‑up was fraudulently charged. It is settled law that where allegation of fraud is levelled, it must be specified and details thereof should be given. The contents of M.O.U. were mutually agreed upon between the parties and there is nothing to suggest that the same as executed by fraud, misrepresentation or under duress or coercion.

8. As far the question of maintainability of the applications under section 12(2), C.P.C. is concerned, it may be noted that consent decree was passed in pursuance of the compromise arrived, at between the parties. The compromise decree was acted upon by the petitioners as they deposited four quarterly installments as agreed upon in the compromise and thereafter they defaulted in payment of further installments. Had the been aggrieved of consent decree, they would have the same in appeal. Since, no appeal was filed against the consent decree, hence, it attained finality. It appears the petitioners, in order to avoid payment of installments filed afterthought applications mala fide intentions. The consent decree did not suffer from fraud, misrepresentation or want of jurisdiction, therefore, the same was not amenable to challenge section 12(2), C.P.C. Thus the applications were maintainable as none of the ingredients for challenging the G validity of decree as contemplated in section 12(2), C.P.C. was available to the petitioners.

9. So far application of the provisions of Corporate and Industrial Restructuring Corporation Ordinance, 2000 (Ordinance L of 2000) to the present case is concerned, it may be noted that this law. came into force on 22‑9‑2000 whereas the consent decree in pursuance of the compromise, had been passed on 18‑2‑1998, as such, the date on which decree was passed, the Ordinance was non existent: Although, the said Ordinance had come into force during the pendency of the application under section 12(2), C.P.C., yet its provisions could not be pressed into service as the applications under section 12(2), C.P.C. were found to be incompetent and thus, not maintainable and the consent decree was held to have been lawfully and validly passed.

10. For the foregoing reasons, we are of the view that the learned Division Bench of the High Court has exhaustively dealt with each and every point alleged before it and we see no ground to interfere with the well‑founded judgment. Consequently, finding no merit in these petitions, the same are dismissed and leave is refused.

S.A.K. / D‑24/ S

Petitions dismissed.