M/s. GULZAR ENTERPRISES through its Managing Partner and 3 others vs
The petitioners challenged an order of the High Court, acting as an appellate forum under the Banking Companies (Recovery of Loans) Ordinance, 1979, which directed them to deposit the decretal sum in cash as a precondition for admitting their appeal to hearing. The core legal question was whether the High Court exercised its discretion improperly under section 12(5) of the Ordinance by requiring a cash deposit instead of accepting the offered properties as security. The Supreme Court held that the High Court's exercise of discretion was neither arbitrary nor based on insufficient grounds, given that one offered property was subject to ongoing litigation and the petitioners' interest in the other was valued far below the decretal amount. Consequently, the petition for leave to appeal was dismissed. The key principle laid down is that the appellate court's discretion under section 12(5) to demand a cash deposit or security is a judicial discretion that will not be interfered with where the offered security is inadequate or encumbered.
- Whether an appeal under the Banking Companies (Recovery of Loans) Ordinance, 1979 can be admitted without depositing the decretal amount or furnishing security?
- Did the High Court exercise its discretion arbitrarily in requiring a cash deposit instead of security under section 12(5) of the Banking Companies (Recovery of Loans) Ordinance, 1979?
- Section 12, Banking Companies (Recovery of Loans) Ordinance, 1979
- Section 12(5), Banking Companies (Recovery of Loans) Ordinance, 1979
ORDER
' SAAD SAOOD JAN, J.---A learned Single Judge of the High Court acting as a Special Court under the Banking Companies (Recovery of Loans) Ordinance, 1979, passed a decree in the sum of Rs,15,74,611 against the petitioners. From the judgment of the learned Special Court the petitioners filed an appeal in the High Court under section 12 of the said Ordinance. A Division Bench in the High Court directed the petitioners to deposit the decrial sum with the Deputy Registrar of the Court before their appeal could be admitted to hearing. Aggrieved by this order the petitioners seek leave to appeal from this Court.
2. From the orders, judgments and decrees of a Special Court the appeals lie to the High Court and are governed by section 12 of the said Ordinance. Subsection (5) of this section reads as follows: "No appeal shall be admitted for hearing unless the appellant deposits in cash with the High Court an amount equivalent to the judgment-debtor, at the discretion of the High Court, furnishes security equal in value to such amount."
' The order of the High Court impugned in this petition has been made in pursuance of this subsection.
3. It is contended on behalf of the petitioners that the High Court had discretion under subsection
(5) ibid. To call upon the appellants to furnish security instead of depositing the decretal amount in cash and that the High Court exercised its discretion wrongly when calling upon the petitioners to deposit the decretal amount in cash. This contention is clearly without merit. It may be mentioned that of the two properties which the petitioners offered by way of security one was the subject of litigation in some Court; as regards the other property the petitioners' interest therein was worth only Rs,5,40,000. In the circumstances, it cannot be said that the High Court exercised its discretion in favour of cash deposit either arbitrarily or on insufficient grounds. This petition is accordingly dismissed.