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

Section: 15,19

Law: Civil Procedure Code (V of 1908)

Section: 13

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)--- ----Ss.15 19---Civil Procedure Code (V of 1908), O. XXXIV, R. 13---Two mortgages created over same asset---Sale of mortgaged asset---Distribution of proceeds---Where two mortgages had been lawfully created in respect of same assets of the debtor, if no other terms were specified between the parties to the contrary, unless the decree of first charge was fully satisfied by its sale proceeds, the decree from second charge, even if created with the consent of first mortgagor, would not be executable as it would be only subject to the satisfaction of the first decree/charge. The State v. Rajah Ram Varu AIR 1966 Andhra Pradesh 233; Union Leasing Ltd. v. Pakistan Industrial Credit and Investment Corpn. Ltd. 2005 CLD 958 and Industrial Development Bank of Pakistan v. Muhammad Ayub Stone Crushers 2009 SCMR 611 ref. JUDGMENT ANWAR ZAHEER JAMALI, C.J.---This civil appeal with leave of the Court as per order dated 11.3.2010 is directed against the judgment dated 18.1.2007 passed by the Division Bench of Peshawar High Court, Peshawar in FAB No.35 of 2005 whereby it was disposed of with the observation that the sale proceeds of the mortgaged property shall be proportionately distributed amongst the Appellant -IDBP and Respondent-UBL, as detailed in it. 2. In brief, the facts leading to this litigation are that in the year 1982 Respondent No. 2 M/s. Shah Industries (Pvt.) Limited had approached Appellant Industrial Development Bank of Pakistan (IDBP) for grant of some finance facility to establish their unit at G.T. Road Nowshera. Such request was acceded to and accordingly some assets of Respondent No.2 were mortgaged with first charge to secure the finance facility of Rs.1.230 million, which was granted to them. Upon commission of default in the payment of installments, Petition under Article 39 of the Industrial Development Bank Ordinance, 1961 was instituted by the Appellant for recovery of Rs.2,433,926.93. During such proceedings the mortgaged assets were attached through an ad interim order dated 07.2.1991, which after notice was confirmed on 02.12.1993, as under:- ‘.... In the circumstances, the…

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