Mst. JABEEN SHAFIQ vs MUSLIM COMMERCIAL BANK LIMITED S — 2026 CLD 486 KARACHI-HIGH-COURT-SINDH

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Mst. JABEEN SHAFIQ VS MUSLIM COMMERCIAL BANK LIMITED S.19(7)---Civil Procedure Code (V of 1908), Ss. 12(2) & 151---Transactions / proceedings qua advancing / recovery of finance / loan---Fraud, plea of---Banking Officials / Court, function / responsibilities of---Scope and effect---An application under S. 12(2), C.P.C and S.19(7) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 having been filed by the Appellant (lady) in execution proceedings was dismissed by the Banking Court---Appellant had filed said application seeking setting aside of a judgment and decree as well as the order passed in favour of auction purchasers on the ground that the same were obtained through fraud and concealment of real facts---Banking Court did not agree with what was pleaded in the application under S. 12(2), C.P.C. on the basis of the findings concluded, after recording evidence, in an application under S. 151, C.P.C. which was earlier filed by the auction purchasers /respondents for implementation of the judgment and decree---Validity---After the application by the auction purchasers under S. 151, C.P.C was filed, the Karachi Development Authority (KDA) officials had come forward and had apprised the Court that the property stood in the name of appellant---Instead of making efforts to find the appellant, the Court simply concluded, when the bailiff reported that no such woman in the name of appellant was residing in the said address since long, that she was a fake person and KDA officials being in collusion with respondent (lady customer) had forged the documents by recording mutation in favour of appellant---Court did not change such view even after appellant filed application under S. 12(2), C.P.C. with her signature supported by her own affidavit---Court did not realize either that conveyance deed in favour of the appellant was prior to mortgage of the property and therefore, when at the time the property was mortgaged by respondent /customer, the same had already changed ownership in favour of the appellant---The apparent negligence of the bank officials in either accepting the loan application without original title documents of the property and without an inquiry from KDA to determine its ownership also lead to a palpable inference of collusion between the bank officials and respondent /customer---Since there was nothing on record that any inquiry was conducted by the bank into original title of the property being mortgaged and to find out its owner from the KDA, it was clear that the bank either acted in haste to benefit respondent / customer or their officials were in active connivance with her to grant her loan without a valid security---Although, appellant was the recorded owner of the property at the time of its mortgage but in the suit she was not made even a party nor any effort was made to procure her attendance---It was only for application under S. 151, C.P.C., filed by auction purchasers that an effort was made to procure her attendance and on a vague report of the bailliff, she (Appellant) was declared a fake person---No effort was made either to resort to substitute service by way of publication in newspaper for procuring her attendance---Regarding the application under S. 12(2), C.P.C., the Banking Court simply got influenced by her previous view taken in application under S.151, C.P.C. that she was a fake person, although she had herself appeared and filed application under S. 12 (2), C.P.C. which necessitated a decision on merits rather than on technicalities---Therefore, not making the appellant as a party in the suit; acceptance of the loan by the bank without original documents of the property; no valid explanation for her absence; non-appearance of beneficiary (respondent /customer) before the Banking Court during the suit and execution proceedings despite service, auction of the property and confirmation of the sale in favour of auction purchasers without any objection by respondent / customer were sufficient facts and circumstances for allowing the application under S. 12(2), C.P.C. filed by the appellant---High / Appellate Court, while setting aside the impugned order , directed the Banking Court to decide the application filed by appellant attending all relevant issues---Appeal was allowed accordingly.

Mst. JABEEN SHAFIQ vs MUSLIM COMMERCIAL BANK LIMITED S — 2026 CLD 486 KARACHI-HIGH-COURT-SINDH

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