BAGHPATEE (Pvt.) Ltd. And Others vs Messrs PAK LIBYA HOLDING COMPANY

ORDER

AJMAL MIAN, J.--Leave to appeal is sought from an order dated 29-3-1989 passed by a learned Single Judge of the High Court of Sindh while acting as a Special Court under the Banking Companies (Recovery of Loans) Ordinance, 1979, hereinafter referred to as the Ordinance, in Suit No.76 of 1988 filed by the respondent against the petitioners for the recovery of Rs.88,01,033 under the Ordinance, granting conditional leave to the petitioners to defend the suit on furnishing security of Rs.88,00,000 by petitioner No.1 and security of Rs.20,00,000 each by petitioners Nos.2 and 3.

2. The facts to be noted are that petitioner No.1 obtained a loan of Rs.50,00,000 from the respondent for purchasing the machinery and equipments for setting up a plant for manufacture of fibre board, paper board, box board and cartons for packing. Petitioners Nos.2 to 4 jointly and severally agreed to provide to petitioner No.1 over-runs of all expenditure for any cause whatsoever. They also provided a letter of over-runs guarantee dated 16-11-1982 to the respondent. They also guaranteed the payment of above loan amount to the respondent. The petitioner No.1 availed of the aforesaid loan and inter alia created a legal mortgage of the property mentioned in para 7 of the plaint. Since there was alleged default on the part of petitioner No.1, respondent after serving notices inter alia dated 11-8-1987 and 21-11-1987 filed the aforesaid suit for the recovery of the aforesaid amount under the provisions of the Ordinance. Upon service of the summons, the petitioners applied for leave to defend the suit which was granted conditionally in the above terms.

The petitioners, being aggrieved by the above order, have filed the present petition for leave to appeal.

3. We have heard Mr.Iqbal Kazi, learned counsel for the petitioners, and Mr.K.MA.Samdani, learned counsel for the caveator/respondent. We are not impressed by the argument of Mr.Iqbal Kazi that respondent could not have filed suit under the provisions of the Ordinance by virtue of Notification dated 31-10-1985 issued by the Federal Government under clause (a) of Section 2 of the Ordinance, hereinafter referred to as the notification, on the ground that the loan agreement was entered into in 1982 when the respondent was not a banking company in terms of above clause (a) of Section 2 of the Ordinance and the above notification cannot be given retrospective effect. It is an admitted position that the notices for recalling of the loan were served on the petitioners by the respondent after about two years from the date of issuance of the notification, so also the suit was filed on 14- 12-1987 after more than two years from the date of issuance of the notification. In our view, the filing of the above suit on the basis of the notification does not involve enforcement of the notification retrospectively as was contended by Mr.Lqbal Kazi. A party is entitled to approach a Court of law on the basis of- the forum available to him on the day when he files a legal proceeding.. In the instant case the respondent was justified in filing the suit on 14-12-1987 under the provisions of the Ordinance before the Special Court as the notification was very much in the field.

4. However, we are inclined to agree with the submission of Mr.Iqbal Kazi that the learned Single Judge of the High Court acting as a Special Court should have given adjustment of the value of the mortgaged property while fixing the amount of security in respect of petitioner No.1. We tried to ascertain the approximate value of the mortgaged property but it seems that the parties are at variance substantially as to the value of the mortgaged property. According to the learned counsel for the petitioners, the value of the mortgaged property is over Rupees one crore, whereas according to Mr.Samdani, the value of the mortgaged property is hardly Rupees ten lacs. We would convert the above petition into an appeal and would dispose of the same by ordering that the learned Single Judge acting as a Special Court, after determining the approximate value of the mortgaged property and after hearing the parties, would give adjustment of the value so determined against the security amount fixed for petitioner No.1. With the above modification, the impugned order is maintained. The appeal stands disposed of in the above terms with no order as to costs.