Messrs CONFORDE LIMITED/ vs Messrs RAFIQUE INDUSTRIES Ltd. And Other
This matter concerns an application for interim relief filed in a pending appeal before the Supreme Court of Pakistan, arising from proceedings under the Banking Companies (Recovery of Loans) Ordinance, 1979. The petitioner, a co-defendant in a recovery suit, sought to suspend the operation of a High Court judgment that had remanded a banking case for fresh decision, and further requested to restrain the respondents from encashing a bank guarantee previously furnished by the petitioner. The core legal questions involved the effect of failing to appeal a preliminary decree and the scope of the Special Court's power under the Ordinance to execute decrees in various manners. The Supreme Court granted the interim relief to the extent of maintaining the status quo regarding the bank guarantee, thereby restraining the respondents from encashing it pending the disposal of the appeal. The Court also clarified that the respondents could seek the reversal of debit entries from the Special Court, which would decide such requests on their own merits. The holding establishes that during the pendency of an appeal, interim relief may be granted to preserve the status quo regarding financial security instruments like bank guarantees.
- Can a party obtain interim relief to restrain the encashment of a bank guarantee pending the disposal of an appeal?
- Does the failure of a party to appeal against a preliminary decree affect the subsequent proceedings in a banking recovery suit?
- What is the scope of the power possessed by a Special Court under the Banking Companies (Recovery of Loans) Ordinance 1979 to execute a decree?
- Section 8(3), Banking Companies (Recovery of Loans) Ordinance 1979
- Section 12, Banking Companies (Recovery of Loans) Ordinance 1979
- Article 185, Constitution of Pakistan 1973
- Order XXXIV, Code of Civil Procedure 1908
ORDER
1. NASIM HASAN SHAH, J.--The petitioner, a co-defendant alongwith respondents No's. 1 and 2 in the proceedings initiated by 'respondent No. 3 for recovery of Rs.8,53,355 under the Banking Companies (Recovery of Loans) Ordinance, 1979 (hereinafter referred to as Ordinance) seeks interim relief in the following terms in a pending appeal filed in this Court as a matter of right under Article 185 of the Constitution:- "It is, therefore, humbly prayed that this Hon'ble Court may be pleased to suspend the operation/implementation of the judgment and decree, dated 16-10-1985 of the learned Lahore High Court in R.F.A. No. 30 of 1984, and respondents be restrained from encashing the Bank guarantee pending disposal of the main petition".
2. The Bank's suit was filed on the basis of a mortgage deed, dated 13-3-1983. A preliminary decree was passed under order XXXIV of C.P.C. On 11-4-1984. The Special Court (Banking) simultaneously attached the sum (Rs.7,10,895-25) lying in the account of respondent No. 1 in Grindlays Bank. On 9- 8-1984, the decree was made final and the Special Court proceeded to execute it under subsection
(3) of section 8 of the Ordinance. The appellant/petitioner made up the balance (Rs.1,44,000). The Special Court (Banking) disposed of the entire matter accordingly.
3. The respondents Nos. 1 and 2 appealed to the High Court under section 12 of the Ordinance challenging the final decree, dated 9-8-1984. During the pendency of the above appeal in the High Court, the appellant was required by it vide order, dated 20-10-1984 in variance of the earlier interim order, dated 21-8-1984 to furnish "unconditional bank guarantee" to the satisfaction of the learned Special Judge (Banking) in the sum of Rs.7,10,000 which shall be encashable at the call of the Court depending upon the result of the appeal. The requisite Bank guarantee was thereupon duly furnished by the petitioner appellant.
4. Ultimately, the High Court allowed the appeal by its impugned order and remanded the case to the Special Court (Banking) "with a direction to decide the case afresh in accordance with the law".
5. This order has been challenged by this appeal and there are substantial questions of law involved iii the case, inter alia, the effect of the failure of either party to appeal against the preliminary decree, the scope of power possessed by Special Court (Banking) under subsection (3) of section 8 of the Ordinance to execute the decree "in such other manner as it may deem fit", which will be attended to in due course.
6. Meanwhile, we consider that the prayer for interim relief be allowed to the extent that status quo be maintained in respect of the Bank guarantee furnished by the petitioner/appellant. In other words, the respondents will not be able to encash the Bank guarantee during the pendency of this appeal.
7. However, the respondents, may, if so advised, move the Special Court for reversal of the debit entry of their account with Grindlays Bank and it shall be open to that Court to pass orders thereon on its own merits, in accordance with law fill other respects, the application is rejected.