livelawpk.com - A Compromise Decree based on Statements of Parties ---

A Compromise Decree based on Statements of Parties is binding and could not be Set Aside --- Islamabad High Court, Islamabad

Islamabad 28-09-2024: The Islamabad High Court (IHC) has dismissed a series of appeals and a civil revision petition in a long-standing property and finance dispute between Syed Waqar-ul-Hassan Shah Bukhari and SME Bank Ltd. The judgment, delivered by Mr. Justice Miangul Hassan Aurangzeb and Ms. Justice Saman Rafat Imtiaz, reaffirms the finality of a settlement agreement recorded in 2003 and addresses multiple issues, including the principles of res judicata, time-barred petitions, and bona fide purchaser rights.

The case, which began over 25 years ago, centers around a finance facility availed by M/s Blossom Towels Industries Pvt. Ltd. in 1996 from the Small Business Finance Corporation (SBFC), now known as SME Bank Ltd. When Blossom defaulted on its repayment obligations, SME Bank sought recovery of the outstanding amount, leading to a decree against Blossom’s Chief Executive Officer, Mian Muhammad Ajmal, and his wife in 2001. The decree was contested in a series of legal proceedings that continued for decades.

In 1999, Ajmal entered into an agreement to sell the disputed property in F-10 Markaz, Islamabad, to Syed Nazar Hussain Shah. The agreement and subsequent supplementary agreements were executed without disclosing the pre-existing mortgage over the property in favor of SME Bank. This concealment of material facts led to prolonged litigation between the parties.

During the execution proceedings in 2002, Nazar, claiming to be a bona fide purchaser without notice of the mortgage, sought to stay the auction of the property initiated by SME Bank. Nazar’s objections were dismissed by the Banking Court, and the dismissal was upheld by the Lahore High Court and the Supreme Court of Pakistan.

In a settlement agreement recorded on October 7, 2003, Ajmal, while in police custody, acknowledged that the entire sale consideration had been received and agreed that Nazar would step into his shoes as the judgment debtor. This settlement allowed SME Bank to withdraw the deposited amount of Rs. 28,05,180/- but did not fully satisfy the decree due to outstanding interest and costs. Ajmal later challenged the settlement and decree, alleging fraud and coercion, but his claims were dismissed at multiple levels.

The Islamabad High Court (IHC) reaffirmed the applicability of the principle of res judicata, which bars re-litigation of issues already decided by a competent Court. The Court dismissed Ajmal’s subsequent suit for declaration and cancellation of agreements as an attempt to collaterally challenge the earlier decree passed in 2003. The judgment emphasized that the decree, being a compromise decree based on Ajmal’s own statement, was binding and could not be set aside.

Additionally, the Court dismissed Ajmal’s civil revision petition [C.R.No.06/2005] as grossly time-barred, highlighting that the limitation period for filing a revision petition under Section 115 of the Code of Civil Procedure, 1908 (CPC), is 90 days. The Court cited numerous precedents, including Government of Balochistan Vs. Abdul Rashid Langove (2007 SCMR 518) and Allah Dino Vs. Muhammad Shah (2001 SCMR 286), to support its ruling that Section 5 of the Limitation Act, 1908, does not apply to such special laws unless explicitly made applicable by the legislature.

The Court upheld SME Bank’s appropriation of the payment deposited by Nazar, first towards the accrued interest and then towards the principal amount. This apportionment was found to be lawful and in accordance with the principles established in Meghraj Vs. Bayabai (AIR 1970 SC 161) and Meka Venkatadri Vs. Raja Parthasarathy (AIR 1922 PC 233).

The IHC also imposed costs amounting to Rs. 10,00,000/- on Ajmal for frivolous litigation, payable into the Government treasury under Section 35(1)(iii) of the CPC, 1908, as inserted by the Costs of Litigation Act, 2017. The Court noted that Ajmal’s repeated attempts to challenge settled matters caused unnecessary delays and amounted to an abuse of the judicial process.

With this judgment, the Islamabad High Court (IHC) has brought closure to a protracted legal battle involving property rights, financial liabilities, and enforcement of a settlement agreement. The Court’s decision reinforces the sanctity of settlements recorded before Courts, the strict adherence to limitation periods, and the need for transparency in contractual dealings.

The appeals [R.F.A.No.204/2004, E.F.A.No.02/2013] and the civil revision petition [C.R.No.06/2005] were dismissed with costs, reaffirming the enforceability of the 2003 settlement and concluding decades of litigation over the disputed property.