| Case ID |
39852ab2-8bd0-489a-be8c-6d050b95d073 |
| Body |
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| Case Number |
C.P.L.A. No.677-K of 2004 |
| Decision Date |
Nov 16, 2006 |
| Hearing Date |
|
| Decision |
The Supreme Court of Pakistan dismissed the petition filed by Pakistan Steel Mills Corporation (Pvt.) Ltd. on November 16, 2006. The petitioner challenged the execution of a consent decree obtained by Pakistan Industrial Credit and Investment Corporation Limited against it for the recovery of a loan amount. The court found that the petitioner had no saleable or marketable interest in the leased plot mortgaged to secure the loan, as evidenced by the 'No Objection Certificate' obtained from the lessor, who was also a shareholder and director of the borrower company. The petitioner failed to demonstrate any fraud, misrepresentation, or lack of jurisdiction on the part of the respondent. Consequently, the application under Section 12(2) of the Civil Procedure Code was dismissed, reinforcing the validity of the existing decree in favor of the bank. |
| Summary |
In the landmark case of Pakistan Steel Mills Corporation (Pvt.) Ltd. versus Pakistan Industrial Credit and Investment Corporation Limited and another, the Supreme Court of Pakistan delivered a pivotal judgment on November 16, 2006, under case number C.P.L.A. No.677-K of 2004. This case revolves around the intricate financial and legal disputes stemming from the Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001) and the Civil Procedure Code (V of 1908), specifically Section 12(2). The petitioner, Pakistan Steel Mills Corporation, sought to contest the execution of a consent decree obtained by the respondent, Pakistan Industrial Credit and Investment Corporation Limited (PICIC), which was aimed at recovering a loan amount provided to respondent No.2, facilitated through a mortgage on a leased industrial plot.
The core of the dispute lies in the validity of the execution of the consent decree against the leased plot No.DSU-19, measuring 5 acres in the Downstream Industrial Estate, Zulfiqarabad. The petitioner argued that the lack of a saleable and marketable interest in the plot rendered the execution of the decree invalid. However, the Supreme Court, presided over by Judges Rana Bhagwandas and Muhammad Nawaz Abbasi, meticulously analyzed the contractual agreements and the legal standing of the parties involved.
Key evidence presented included the promoters agreement dated August 15, 1989, which outlined mutual consent protocols for significant corporate decisions. The court observed that the petitioner, being a shareholder and director of respondent No.2, was inherently bound by the actions and contracts executed by the company, including the mortgage arrangement with PICIC. Furthermore, the 'No Objection Certificate' dated January 3, 1990, substantiated that Pakistan Steel Mills had no reservations regarding the creation of the mortgage, thereby nullifying the petitioner's claims of unauthorized actions.
The judgment emphasized the legal principle that shareholders and directors are accountable for the corporate actions of the entities they represent. The petitioner failed to establish any fraudulent intent, misrepresentation, or jurisdictional overreach by the respondent, leading to the dismissal of the application under Section 12(2) of the Civil Procedure Code. This decision underscores the judiciary's role in upholding contractual obligations and the sanctity of consent decrees in financial recovery mechanisms.
For legal professionals and entities involved in corporate finance and litigation, this case serves as a precedent on the enforceability of consent decrees and the responsibilities of corporate officers in safeguarding their companies' financial commitments. The Supreme Court's ruling reinforces the importance of due diligence, comprehensive contractual agreements, and the legal accountability of directors and shareholders in commercial ventures. As businesses navigate complex financial landscapes, understanding the implications of such judgments is crucial for ensuring compliance and mitigating legal risks in corporate operations. |
| Court |
Supreme Court of Pakistan
|
| Entities Involved |
PAKISTAN INDUSTRIAL CREDIT AND INVESTMENT CORPORATION LIMITED,
PAKISTAN STEEL MILLS CORPORATION (PVT.) LTD.,
Multipole Industries Limited
|
| Judges |
RANA BHAGWANDAS,
MUHAMMAD NAWAZ ABBASI
|
| Lawyers |
M. G. Dastagir,
Akhlaq Ahmad Siddiqui,
Habibur Rehman,
Nemo
|
| Petitioners |
PAKISTAN STEEL MILLS CORPORATION (PVT.) LTD.
|
| Respondents |
Respondent No. 2,
PAKISTAN INDUSTRIAL CREDIT AND INVESTMENT CORPORATION LIMITED
|
| Citations |
2007 SLD 2853,
2007 CLD 853
|
| Other Citations |
Sindh High Court Judgment dated 28-6-2004,
Suit No.730 of 1990,
Consent Order dated 23-12-1998,
J.M. No.1 of 2002
|
| Laws Involved |
Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001),
Civil Procedure Code (V of 1908)
|
| Sections |
9,
17,
19,
12(2)
|