Law: Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)

Section: 19,22

Law: Transfer of Property Act, 1882

Section: 58

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)--- ----Ss. 19 & 22---Transfer of Property Act (IV of 1882), S.58---State Bank of Pakistan, BPD Circular No.29, dated, 15-10-2002---Execution of decree---Compromise decree---Mortgaged property---Change in shares---Suit for recovery of bank loan was decreed on the basis of compromise between the parties deciding shares to be received by two financial institutions out of the assets of defendants/customers---During execution of decree, plaintiff/bank intended to change share ratio in its favour by decreasing that of other financial institution---Single Judge of High Court dismissed the application filed by plaintiff bank---Validity---Plaintiff bank could not enlarge its share in the security having recourse to S. 58 of Transfer of Property Act, 1882, or for that matter contents of BPD Circular No.29 issued by State Bank of Pakistan, on 15-10-2002---Legal rights for settlement of over-dues was over-ridden by the conduct of parties inter se following the compromise, which had taken into account provisions of law and contents of the Circular---Compromise created a mechanism for modifying rights of parties which were to be decided to be modified on basis of certain existing contents---Modified rights were enumerated in settlement application sanctioned by Banking Court with the consent of parties---Recourse of the provisions of law and BPD Circular No.29 was superseded by arrangement made between the parties---Payment of amount by defendants / customers to plaintiff/bank in pursuance of settlement application and order passed by Banking Court had created rights in parties including defendants / customers and other financial institution in relation to sharing ratio in security---Any modification of such sharing ratio was to have occurred by consent of parties and not unilaterally---Enhancing share of plaintiff/bank of sharing ratio of other financial institution was illegal and against defendants/customers---Division Bench of High Court declined to interfere in order passed by Single Judge of High Court---Appeal was dismissed in circumstances. JUDGMENT MUHAMMAD FARRUKH IRFAN KHAN, J.---This…

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