Summary: (a) Code of Civil Procedure, 1908 (V of 1908)--- ---- S. 12(2)---Fraud and misrepresentation---Scope---Maintainability of application under S.12(2), C.P.C.---Consent decree obtained through collusion between parties to deprive a third party---Effect. A consent decree entered into by collusion or fraud falls outside the protection of the lis pendens rule (S.52, Transfer of Property Act, 1882). Where a party to a decree has transferred property to a bona fide purchaser and then colludes with the opposing party to have the decree set aside on compromise, the doctrine of lis pendens cannot be applied mechanically. Fraud in judicial proceedings, including deceptive consent statements made to a court, justifies invoking S.12(2), C.P.C. (b) Transfer of Property Act, 1882 (IV of 1882)--- ---- S. 52---Lis pendens---Exception where fraud is committed---Fraudulent compromise to defeat third-party rights. The rule of lis pendens does not apply where a decree is set aside through fraudulent collusion after a legitimate transfer has taken place. Where a judgment-debtor, after transferring property to a third party, later consents to setting aside a decree without disclosing the sale, such an act constitutes a misrepresentation before the court. Reliance placed on Fazal Karim v. Muhammad Afzal (PLD 2003 SC 818) and Muhammad Zubair v. Muhammad Tahir Shafique (PLD 2013 Lahore 154). (c) Code of Civil Procedure, 1908 (V of 1908)--- ---- S. 12(2)---Scope of fraud against a third party not party to the original suit---Maintainability of application. An application under S.12(2), C.P.C. is maintainable not only by parties to a suit but also by any person adversely affected by a fraudulent decree. The law does not restrict the right of challenge solely to judgment-debtors or their legal successors. Any person whose legal rights have been jeopardized due to collusion in judicial proceedings has standing to seek relief under S.12(2), C.P.C.. Reliance placed on Abdur Rauf v. Abdur Rahim Khan (PLD 1982 Peshawar 172) and Ch. Jalal Din v. Mst. Asghari Begum (1984 SCMR 586). (d) Civil Procedure---Judicial Proceedings---Fraud on court---Duty to frame issues and record evidence. Where allegations of fraud require factual determination, the court must frame issues and allow parties to lead evidence. Summary dismissal of an application under S.12(2), C.P.C. is only justified where no prima facie fraud is evident, but where fraud is alleged in a decree obtained through compromise, failure to record evidence constitutes a legal infirmity. Reliance placed on Muhammad Nawaz Khan v. Muhammad Khan (2002 SCMR 2003) and Mrs. Anis Haider v. S. Amir Haider (2008 SCMR 236). (e) Revisional Jurisdiction--- ---- S. 115, C.P.C.---Jurisdictional defect---Failure to properly adjudicate fraud allegations---Remand of case. A revisional court is justified in setting aside a lower court's order where allegations of fraud in obtaining a consent decree are summarily dismissed without framing issues or recording evidence. The case must be remanded for proper adjudication. Reliance placed on Muhammad Iqbal v. Khair Din (PLJ 2014 SC 11). Disposition: Revision petition allowed. Impugned order set aside. Case remanded for adjudication after framing issues and recording evidence. Cited Cases: Muhammad Ashraf Butt v. Muhammad Asif Bhatti (PLD 2011 SC 905) Sheikh Muhammad Iftikhar Ahmad v. Faiz Ahmad (2023 SCMR 2158) Fazal Karim v. Muhammad Afzal (PLD 2003 SC 818) Syed Mehmood Ali Shah v. Zulfiqar Ali (PLD 2013 SC 364) Muhammad Nawaz Khan v. Muhammad Khan (2002 SCMR 2003)

Summary: (a) Specific Relief Act, 1877 (I of 1877) – ---- S. 12 – Suit for specific performance – Agreement to sell executed by an attorney – Competency of attorney to enter into agreement – Discretion of court in granting decree – Plaintiff sought specific performance of an agreement to sell executed by an attorney on behalf of the original owner – Evidence revealed that the original owner had previously transferred the property through a written sale deed prior to the agreement to sell – The owner, until his last breath, acknowledged the prior transfer – Held, when a property has already been transferred by the original owner, an attorney cannot validly execute another agreement to sell the same property – Decree for specific performance is a discretionary relief and can only be granted if the plaintiff proves the agreement without any doubt – Trial court rightly refused the decree for specific performance, while the first appellate court erroneously reversed the findings – High Court restored the trial court’s decision, holding that the plaintiffs were not entitled to specific performance as the property was not available for transfer at the time of the agreement. (b) Registration Act, 1908 (XVI of 1908) – ---- S. 49 – Unregistered sale deed – Legal effect – Plaintiff challenged an unregistered sale deed relied upon by the defendants – Held, under Section 49 of the Registration Act, 1908, an unregistered sale deed cannot be treated as a valid instrument of transfer – However, where possession is delivered pursuant to such a document, it may constitute a basis for relief under the doctrine of part performance – High Court affirmed that the possession of the appellants was delivered under the sale deed and was never challenged successfully by the respondents. (c) Civil Procedure Code, 1908 (V of 1908) – ---- S. 12(2) – Challenge to a decree – Locus standi – Plaintiffs challenged a decree granted in favor of the defendants without filing an application under Section 12(2) of the C.P.C. – Held, where a plaintiff lacks locus standi to challenge a decree directly under Section 12(2) of the C.P.C., a separate suit seeking a declaration of rights is a permissible mode of challenge – However, in the present case, the plaintiffs failed to establish misrepresentation, fraud, or jurisdictional defect in the decree granted to the appellants – Consequently, their challenge to the decree was unsuccessful. Disposition: Appeal allowed. Judgment and decree of the first appellate court set aside. Suit filed by the respondents dismissed with costs throughout.

Summary: (a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001) – S. 10 & Civil Procedure Code (V of 1908) – S. 12(2): Banking suit for recovery––Decree passed without providing sufficient opportunity to defendants––Excessive mark-up charged by the bank––Principles––Respondent Bank filed a suit for recovery of Rs.64,80,563 against the appellants, including guarantors and mortgagors––Trial Court decreed the suit for Rs.63,58,200 and dismissed appellants’ leave application––Appellants challenged the decree, contending that excessive mark-up was charged, documents were manipulated, and the mortgage agreement was not duly sanctioned––High Court observed discrepancies in the calculation of mark-up, which exceeded the agreed contractual rate and did not reflect deposits made by the appellants––Held, appellants were entitled to leave to defend their case on the issue of excessive mark-up. (b) Civil Procedure Code (V of 1908) – S. 12(2): Service of notice––Misrepresentation by counsel––Principles––Appellant No.7 contended that he was not served and was not represented by the counsel who filed the leave application on his behalf––High Court treated his application as one under S. 12(2), C.P.C., and directed the Banking Court to decide the matter on the basis of facts presented––Decree against appellant No.7 suspended pending the outcome of the application––If the application under S. 12(2) is allowed, the decree shall stand set aside as against appellant No.7, enabling him to file a fresh leave application. (c) Administration of Justice: Fair adjudication––Principles––Courts must ensure substantive justice is served by addressing genuine disputes, including discrepancies in calculations and lack of opportunity to defend––Decree partially set aside to allow appellants to defend claims of excessive and unauthorized charges. ----Disposition Appeal partially allowed––Decree against appellants modified to exclude disputed mark-up amounts––Appellants granted leave to defend regarding excessive mark-up––Decree against appellant No.7 suspended pending decision of his application under S. 12(2), C.P.C.––Case remanded for further proceedings.

Summary: (a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997): ---- Ss. 7, 15 – Recovery of loan – Decree passed by Banking Court – Application under S. 12(2), C.P.C. for setting aside decree – Jurisdiction of Banking Court – Finality of decree – Applicability of S. 12(2), C.P.C. in banking matters. Appellant challenged the dismissal of its application under S. 12(2), C.P.C., wherein it sought to set aside a decree passed by the Banking Court in favor of the respondent bank for the recovery of outstanding loan amounts. The appellant contended that (i) no proper service was effected, (ii) incorrect address was provided in the plaint, (iii) alleged guarantees were forged, and (iv) appellant was neither a beneficiary, guarantor, nor borrower. The Banking Court dismissed the application, holding that S. 12(2), C.P.C. was not applicable in banking matters. Held, that under S. 7 of the 1997 Act, a Banking Court has the powers of a Civil Court under C.P.C., and the decree attained finality under S. 21 of the 1997 Act, subject only to an appeal. The remedies provided under the special law included a right of appeal and a mechanism to challenge decrees, thereby precluding applications under S. 12(2), C.P.C.. Allowing such applications would undermine the purpose of the Banking Act. Judicial discipline required the Banking Court to follow precedent set by the Sindh High Court, which had previously held that S. 12(2), C.P.C. applies to decrees passed under the Banking Tribunals Ordinance, 1984, and the Banking Companies (Recovery of Loans) Ordinance, 1979. Appeal dismissed. (b) Civil Procedure – Misrepresentation and fraud as grounds for setting aside decree – Burden of proof – Use of forged documents in court proceedings: Appellant alleged that the decree was obtained through fraud, as the bank relied on forged guarantees. Held, that mere falsity of a claim, even if known to the plaintiff, does not constitute fraud unless it is proven that a deliberate misrepresentation was made to the court. Fraud must relate to proceedings within the court and not acts done outside. The burden lay on the appellant to prove that the alleged fraud met the legal threshold. Reliance was placed on Lai Din v. Muhammad Ibrahim (1993 SCMR 710), which held that a decree cannot be set aside solely on the ground that a party knowingly put forward an untrue claim. Application dismissed for lack of merit. (c) Constitutional Law – Judicial discipline – Binding nature of High Court precedents – Article 201 of the Constitution: The Banking Court followed the decision of the Lahore High Court in Gold Star International v. MCB (2000 MLD 421) instead of following the binding precedents of the Sindh High Court in Mian Muneer Ahmed v. United Bank Ltd. (PLD 1998 Karachi 278) and National Bank of Pakistan v. Khairpur Textile Mills (2001 CLC 1187). Held, that under Article 201 of the Constitution, lower courts are bound by precedents of the respective High Court unless overruled by the Supreme Court. The Banking Court erred in following a conflicting precedent from another High Court instead of adhering to the binding decisions of the Sindh High Court. ----Disposition: Appeal dismissed in limine as meritless – Decree upheld.

Summary: (a) Civil Procedure Code (V of 1908) – S.12(2), O.XXI, R.58: Fraud and misrepresentation—Challenging validity of judgment and decree—Attachment of property without ownership rights—Remedy. Applicant filed an application under S.12(2), C.P.C., challenging a consent judgment and decree on the ground that his property (Plot No.RL-19, Overseas Cooperative Housing Society Ltd., Karachi) was fraudulently included in the execution proceedings despite not being owned or mortgaged by the judgment debtors. Held, that S.12(2), C.P.C., provides a special remedy to challenge an order, judgment, or decree obtained by fraud or misrepresentation. Under O.XXI, R.58, C.P.C., an aggrieved person can also object to the attachment of property if it does not belong to the judgment debtors. In the present case, the applicant produced documentary evidence (sub-license, share certificate, site plan, and building approval) establishing ownership of Plot No.RL-19, while the decree pertained to Plot No.33/4, Block 7 and 8, Banglore Cooperative Housing Society Ltd. Thus, the execution of the decree against applicant’s property was not sustainable. (b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001) – S.19(7): Banking Court’s jurisdiction—Investigation of claims and objections—Separate suit not maintainable. Under S.19(7) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, the Banking Court is required to follow a summary procedure for investigating claims and objections regarding the attachment or sale of property, whether mortgaged, pledged, or hypothecated. A financial institution must provide a written undertaking to compensate the aggrieved party and pay a penalty of up to 20% of the sale proceeds if the objections are upheld. Held, that objections to the attachment of property must be adjudicated within the execution proceedings, and a separate suit for this purpose is not maintainable. Since the applicant’s claim involved a dispute over ownership of the attached property, the court directed that the application be treated as one under S.19(7) of the Ordinance, 2001, and be placed in the execution proceedings for determination. (c) Disposition: Application treated as an objection under S.19(7) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, and transferred to execution proceedings for adjudication. Notice issued to decree-holder and judgment debtors.

Summary: (a) Civil Procedure Code (V of 1908)----S. 12(2): Ex parte decree---Application for setting aside---Fraud and misrepresentation. The petitioner obtained an ex parte decree for declaration, cancellation of documents, and permanent injunction regarding the disputed property without impleading respondent No.2, the alleged rightful owner of the property by virtue of a registered sale deed. Respondent No.2 filed an application under S. 12(2), C.P.C., claiming fraud and suppression of material facts. The learned Single Judge, upon finding sufficient material supporting respondent No.2's ownership rights, set aside the ex parte decree. The High Court Division Bench upheld this decision, finding no illegality or irregularity in setting aside the decree obtained through misrepresentation. (b) Specific Relief Act (I of 1877)----Ss. 39, 42 & 54: Suit for declaration, cancellation, and injunction---Non-impleadment of necessary parties---Effect. In a suit involving cancellation of a registered sale deed and permanent injunction, non-impleadment of the actual owner of the disputed property (respondent No.2) rendered the ex parte decree invalid. The courts held that the petitioner’s failure to challenge the transaction involving respondent No.2 or to implead him as a party demonstrated misrepresentation, justifying the setting aside of the decree. (c) Constitution of Pakistan (1973)----Art. 185(3): Supreme Court’s refusal to grant leave---No substantial question of law or public importance. The Supreme Court declined to interfere with the High Court's decision to set aside the decree, noting no substantial question of law or public importance requiring its intervention. The petitioner retained the right to establish her case during the trial, which would be decided on merits. -----Disposition: Petition dismissed. Leave to appeal refused.

Summary: (a) Family Law---Execution of maintenance decree: Auction of judgment-debtor's property without following statutory procedure. Under Section 13(3) of the Family Courts Act, 1964, recovery of maintenance decrees must follow the prescribed method, i.e., recovery as arrears of land revenue. Direct auctioning of property without adhering to this procedure is irregular. Courts are obligated to first summon the judgment-debtor and exhaust all conciliatory measures before resorting to coercive actions. (b) Civil Procedure---Applicability of CPC to Family Courts: Family Courts Act as a special statute excluding general procedural laws. The Family Courts Act excludes the application of the Code of Civil Procedure (CPC) and the Qanun-e-Shahadat Order except for specific provisions. Section 12(2) CPC, which provides for review of judgments on grounds of fraud or jurisdictional defects, does not automatically apply to proceedings under the Family Courts Act. Family Courts are special tribunals governed by their own procedural framework designed to expedite and simplify family disputes. (c) Civil Law---Effect of defective auction on subsequent transactions: Auction purchaser’s defective title and rights of subsequent transferees. Subsequent transferees who acquire property from an auction purchaser with a defective title inherit the defects. In this case, the auction purchaser accepted repayment from the judgment-debtor, rendering the auction void. The transferees cannot claim rights superior to those of the auction purchaser but retain the option to seek redress in a court of general jurisdiction against the auction purchaser for recovery of money or costs. (d) Procedural Law---Lis pendens and its effect on property transactions: Transfer of property during pending litigation. The doctrine of lis pendens applies to property transactions conducted during pending litigation. Any sale or transfer made during the pendency of a suit is subject to the outcome of that suit, and the transferee acquires no superior rights against the decree-holder or judgment-debtor. ----Disposition: Writ petition dismissed. Orders of the lower courts upheld. The auction proceedings were set aside, and the decree satisfied through payment. Petitioners advised to seek remedies in appropriate forums against the auction purchaser.

Summary: (a) Civil Procedure Code (V of 1908) – S. 12(2), S. 100: Limitation Act (IX of 1908) – Article 181 Time-barred application—Limitation for setting aside decree on grounds of fraud or misrepresentation—Effect of prolonged litigation—Petitioner (Muhammad Turab) initially lost a pre-emption suit in 1967, followed by multiple unsuccessful appeals up to 1972—Subsequent suit for recovery of pre-emption amount dismissed in 1982, with appeals dismissed up to 1985—After a delay of three years, petitioner filed an application under S. 12(2), C.P.C., which was dismissed in 1989—First appeal also dismissed in 1991—Held, that under Article 181 of the Limitation Act, the prescribed period for filing such an application is three years—Petitioner filed the application after 16 years, rendering it time-barred—Precedents (PLJ 1986 Karachi 217; 1986 CLC 899) affirm that applications filed beyond the limitation period cannot be entertained—Lower courts correctly dismissed the application—No legal justification for continued litigation—Second appeal dismissed with costs. ----Disposition: Appeal dismissed with costs.

Summary: (a) Specific Relief Act (I of 1877): ----S. 12 Specific performance of contract—Compromise decree—Declaratory decree in a suit for specific performance—Validity of compromise. A declaratory decree cannot generally be issued in a suit for specific performance, as an agreement to sell is not a title document but only an instrument for obtaining a title document. However, where a compromise is reached between the parties, and the compromise is lawful, a decree based on such compromise is valid. In the present case, the appellant, Javaid Aziz, filed a suit for specific performance of a contract based on an agreement to sell executed by Kausar Yasmeen. The parties entered into a compromise wherein Kausar Yasmeen admitted the appellant’s claim to the extent of 7 marlas of land. The trial court issued a compromise decree accordingly. The High Court held that the decree was not in violation of law, as it was based on a lawful compromise fulfilling the requirements of Order XXIII, Rule 3, C.P.C. (b) Civil Procedure Code (V of 1908): ----S. 12(2) Application to set aside compromise decree—Allegation of fraud, misrepresentation, or want of jurisdiction—Scope of judicial review. Under S. 12(2), C.P.C., a judgment, decree, or order can be challenged only on grounds of fraud, misrepresentation, or lack of jurisdiction. The respondent, Nusrat Tanveer, filed an application under S. 12(2), C.P.C., to set aside the compromise decree, alleging it was obtained fraudulently and in connivance with the vendor. The High Court held that there was no evidence of fraud or misrepresentation, as the vendor was the admitted owner of the 7 marlas in dispute and had voluntarily entered into the compromise. The court further noted that non-impleadment of the respondent in the original suit did not amount to fraud but, at most, a defect that could have been addressed through amendment in a separate suit. As none of the conditions of S. 12(2), C.P.C., were met, the application was not maintainable. (c) Right of Prior Purchase Act, 1993 (BK): ----Ss. 4 & 6 Compromise decree and right of pre-emption—Effect of decree on preferential rights of a co-sharer. The respondent also contended that the compromise decree was a device to evade pre-emption rights and avoid payment of court fees. The High Court observed that if a pre-emptor’s preferential right was affected by the decree, the appropriate remedy was to file a suit under the Right of Prior Purchase Act, rather than seeking to annul the decree under S. 12(2), C.P.C. ----Cited Cases: • 2006 SCR 183 • 2006 SCR 92 • PLD 2006 SC (AJ&K) 9 = 2006 CLC 1872 • 2001 CLC 1502 • 2012 MLD 1440 • 2002 CLC 372 Lahore ----Disposition: Appeal allowed; judgment of the District Judge set aside; compromise decree dated 29-05-2012 maintained.

Summary: (a) Specific Relief Act (I of 1877) – Ss. 42 & 39 – Civil Procedure Code (V of 1908) – Ss. 12(2), O. XXIII, R.3 – Administration of Justice Compromise in civil suits – Annulment of compromise deed on the basis of fraud – Retrospective effect of amendments in procedural law – Suit for cancellation of decree or proceedings based on fraud and misrepresentation – Scope. Respondents filed a declaratory suit seeking cancellation of a sale deed, and during the pendency of the suit, a compromise was recorded. Before the compromise decree could be passed, the appellant alleged fraud and sought annulment of the compromise. The trial court, instead of passing the decree, framed issues on the appellant’s objections. The respondents challenged this, and the Supreme Court directed the trial court to pass the decree in terms of the compromise under O. XXIII, R.3, C.P.C. After the Supreme Court's decision, the appellant filed a separate declaratory suit for possession of the property, which was later amended. The trial court rejected the plaint under S.12(2), C.P.C., on the ground that the amended law had retrospective effect. The High Court upheld the rejection. The appellant contended that the amendment to S.12(2), C.P.C., adopted in Azad Kashmir in 2003, could not apply retrospectively to his case. Conversely, the respondents argued that the amendment was procedural and applied retrospectively, rendering the suit incompetent. Held, that retrospective application of amendments in procedural law depends on whether it causes inconvenience or injustice. The amendment in S.12(2), C.P.C., being substantive in nature, could not operate retrospectively if it prejudiced the parties. The amendment did not affect suits filed prior to its enforcement, and the appellant’s suit was competent. The trial court could have treated the suit as an application under S.12(2), C.P.C., rather than rejecting it purely on technical grounds. Courts lean in favor of adjudication on merits rather than suppressing remedies based on procedural technicalities. Rejection of the suit merely because the word “plaint” was used instead of “application” was unjustified. The impugned judgment and decree were set aside, and the case was remanded for adjudication on merits. ----Cited Cases: Fateh Muhammad’s case 1981 CLC 1130 Adnan Afzal’s case PLD 1969 SC 187 1981 CLC 1248 1992 SCMR 1744 ----Disposition: Appeal allowed, impugned judgment set aside, case remanded to trial court for decision on merits.