IN THE SUPREME COURT OF PAKISTAN 
(APPELLATE JURISDICTION) 
 
 
 
PRESENT: MR. JUSTICE MIAN SAQIB NISAR, HCJ 
 
 
 
MR. JUSTICE FAISAL ARAB 
 
 
 
MR. JUSTICE IJAZ UL AHSAN 
 
 
CIVIL APPEAL NO.1447 OF 2016 CRL. ORIGINAL PETITION 
NO.220 OF 2016 IN CIVIL APPEAL NO. 1447 OF 2016 
(Against the order dated 16.2.2016 of the High Court of Sindh at Karachi 
passed in Spl.H.C.A.No.2/2016) 
 
 
 
Gulistan Textile Mills Ltd. 
 
 
In C.A.1447/2016 
Soneri Bank Ltd.  
 
 
 
In Cr.O.P.220/2016 
…Appellant(s)/Petitioner(s) 
VERSUS 
Soneri Bank Ltd.  
 
 
 
In C.A.1447/2016 
Naseer Ahmed 
 
 
 
 
In Cr.O.P.220/2016 
…Respondent(s) 
 
For the Appellant(s): 
 
Mr. Salman Aslam Butt, Sr. ASC 
 
 
 
 
 
Syed Rifaqat Hussain Shah, AOR 
 
 
 
 
 
(In C.A.1447/2016) 
 
 
 
 
 
 
Ms. Sofia Saeed, ASC 
 
 
 
 
 
Mr. Tariq Aziz, AOR 
 
 
 
 
 
(In Cr.O.P.220/2016) 
 
For the Respondent(s):  
Ms. Sofia Saeed, ASC 
 
 
 
 
 
Mr. Tariq Aziz, AOR 
 
 
 
 
 
(In C.A.1447/2016) 
 
 
 
 
 
 
Mr. Salman Aslam Butt, Sr. ASC 
 
 
 
 
 
Syed Rifaqat Hussain Shah, AOR 
 
 
 
 
 
(In Cr.O.P.220/2016) 
 
Date of Hearing:  
 
2.1.2018 
 
JUDGMENT 
 
 
 
MIAN SAQIB NISAR, CJ.- The facts pertaining to this 
appeal, with the leave of the court, are that the respondent (bank) 
filed a suit for recovery and sale of pledged stocks under Section 9 
of the Financial Institutions (Recovery of Finances) Ordinance, 
2001 (Ordinance) before the learned Banking Court pursuant to 
which the appellant (customer/borrower) filed its application for leave to 
defend, which is currently pending adjudication. During the course 
of proceedings in the suit, the respondent filed an application 
Civil Appeal No.1447 of 2016 
 
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(C.M.A. No.11483/2012) inter alia seeking the sale of the goods allegedly 
pledged in favour of the respondent, which was dismissed by the 
learned Banking Court vide order dated 16.4.2013: on the ground 
that such application was premature as the application for leave to 
defend was yet to be decided and the respondent’s apprehension 
regarding misappropriation of goods was unfounded since the keys 
of the godown were with the muccadam and additionally a status 
quo order passed  in a civil suit filed by the appellant, against inter 
alia the respondent, before the learned Lahore High Court, was in 
the field and stood in the way of grant of said application. This 
order remained unchallenged and has since attained finality. 
Thereafter, the respondent filed another application (C.M.A. 
No.16530/2015), again inter alia, seeking the same relief as in its 
previous application. This second application was allowed by the 
learned Banking Court vide order dated 4.12.2015 (the appellant was 
proceeded against ex-parte and this order was an ex-parte order) primarily on the 
ground that the goods in question were likely to be devalued and 
this happenstance necessitated sale. The appellant unsuccessfully 
challenged this impugned order before a Division Bench of the 
learned High Court and thereafter approached this Court. Leave 
was granted on 13.5.2016 in the following terms:- 
 
“Learned counsel for the petitioner states that 
per the provisions of Section 16 of the 
Financial Institutions (Recovery of Finances) 
Ordinance, 2001, the learned Banking Court 
has no jurisdiction to direct the sale of the 
goods belonging to the petitioner allegedly 
pledged with the respondent-bank. It is 
further argued that on account of the specific 
provisions ibid the general law envisaged by 
Civil Appeal No.1447 of 2016 
 
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Order 39 Rule 6 of the CPC empowering the 
sale of security by the court as an interim 
measure shall not be available or invoked. It 
is further submitted that the goods for which 
the sale has been directed by the learned 
Banking Court are not the ones which are 
pledged with the respondent-bank, rather 
those are hypothecated. There is an earlier 
application filed by the respondent-plaintiff 
for the sale of the property which has been 
rejected, thus the principle of res judicata 
shall be applicable. Reliance in this behalf is 
placed upon Messrs Lanvin Traders, Karachi 
Vs. Presiding Officer, Banking Court No.2, 
Karachi and others (2013 SCMR 1419). 
Leave is granted to consider the above.” 
 
2. 
 
Learned counsel for the appellant submitted that the 
respondent admitted in its replication (paragraph No.16) to the 
application for leave to defend that the security was not pledged 
but rather hypothecated, and having so admitted it cannot take 
advantage of Section 176 of the Contract Act, 1872 which allows a 
pawnee to sell pledged and not hypothecated goods. Further, he 
stated that interim sale of goods is not permitted by the 
Ordinance. In this respect he referred to and read out the 
provisions of Sections 7, 16, 19 and 23 of the Ordinance. 
According to the learned counsel, the purpose of Section 16 of the 
Ordinance is to preserve property and the legislature’s intent is 
revealed by the use of the word ‘preventing’ therein. Section 16(4) 
specifically saves sub-sections (1) and (3) and additionally the 
powers under Order XXXVIII Rule 5 and 6 of the Code of Civil 
Procedure, 1908 (CPC) have also been bestowed upon the Banking 
Court with regard to property which may not form a part of the 
Civil Appeal No.1447 of 2016 
 
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security mentioned in Section 16(1) of the Ordinance. According to 
him, whatever powers the legislature wanted to bestow upon the 
Banking Court have been specifically mentioned in Section 16. 
Learned counsel submitted that Section 23(2) of the Ordinance 
does not give the power to sell, whereas Section 19(3) specifically 
provides for sale, therefore wherever the legislature wanted to give 
the Banking Court the power to sell, it did so expressly. He went 
on to argue that although the Banking Courts have been given the 
powers of a Civil Court under the CPC by virtue of Section 7 of the 
Ordinance, the use of the words “subject to the provisions of this 
Ordinance…” in sub-section (1) thereof means that where specific 
provisions in the special law, i.e. the Ordinance, cater to a 
particular situation the general law would cede. Learned counsel 
for the appellant further contended that the second application for 
sale of allegedly pledged goods filed by the respondent was barred 
by the principle of res judicata which also applied to applications. 
In this respect he relied upon the judgment reported as Hashir 
Ahmad Vs. Kamaluddin etc. (1981 SCMR 1180). He further 
stated that the appellant did not receive notice of the second 
application filed by the respondent and was therefore not heard 
when the impugned order dated 4.12.2015 was passed. He argued 
that the learned Division Bench of the Banking Court failed to 
advert to/decide this question relating to the said application as 
the same was decided without giving an opportunity of hearing to 
the appellant.  
3. 
 
On the other hand, learned counsel for the respondent 
referred to various documents including the plaint filed by the 
respondent, letters, reports and orders of the Official Assignee in 
order to establish that the goods were in fact pledged and not 
Civil Appeal No.1447 of 2016 
 
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hypothecated. 
With 
respect 
to 
the 
respondent’s 
apparent 
admission in their replication to the application for leave to defend 
that the goods were hypothecated and not pledged, she averred 
that it was simply a typographical error. Learned counsel further 
submitted that the circumstances surrounding the filing of both 
the applications were different, in that with respect to the second 
application, the keys were no longer with the muccadam leading to 
the apprehension that the goods were likely to be misappropriated 
which in turn justified sale of the goods vide order dated 
4.12.2015. 
4. 
 
Heard. It is pertinent to mention at the very outset 
that throughout this opinion, we have deliberately refrained from 
commenting or adjudicating upon the factual aspect as to whether 
the goods in question were pledged or hypothecated as this would 
involve a detailed factual exercise and determination in a matter 
arising out of an interlocutory order, which in turn would have a 
direct impact on the suit filed by the respondent and the 
application for leave to defend filed by the appellant, pending 
before the Banking Court. In order to determine whether the 
Banking Court has the power to direct interim sale of goods under 
the provisions of Section 16 of the Ordinance we find it expedient 
to briefly discuss the history and purpose of banking laws in 
Pakistan. Initially the resolution of banking disputes was by 
means of filing a civil suit, with the CPC governing the 
proceedings. In 1978, a special law was enacted; the Banking 
Companies (Recovery of Loans) Ordinance, 1978 (Ordinance of 1978) 
which created Special Courts and moreover provided a special 
procedure for the disposal of matters pertaining to banking 
companies and recovery of loans which fell within the ambit of the 
Civil Appeal No.1447 of 2016 
 
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said Ordinance. It was followed by the Banking Companies 
(Recovery of Loans) Ordinance, 1979 which repealed and re-
enacted with certain modifications the Ordinance of 1978. 
Thereafter, the Banking Tribunals Ordinance, 1984 (Ordinance of 
1984) was promulgated which created the Banking Tribunals and 
provided a machinery for recovery of finances provided by banking 
companies. Then the Banking Companies (Recovery of Loans, 
Advances, 
Credits 
and 
Finances) 
Ordinance, 
1997 
which 
eventually culminated into the Banking Companies (Recovery of 
Loans, Advances, Credits and Finances) Act, 1997 (Act of 1997) 
created the Banking Courts to resolve disputes pertaining to 
defaults in terms of fulfilling of their obligations by the customer, 
borrower or banking company as defined by the said Act. Finally, 
the Financial Institutions (Recovery of Finances) Ordinance, 2001 
was promulgated which repealed and re-enacted with certain 
modifications the Act of 1997. The aforementioned banking 
statutes in general and the Ordinance in particular were 
essentially enacted to be complete and comprehensive codes. This 
special law postulates the procedure for the resolution of disputes 
between financial institutions and customers pertaining to 
recovery of finances falling within the domain of the Ordinance. A 
special triumvirate of jurisdiction has been conferred upon the 
Banking Courts created by the Ordinance : territorial, party based 
and subject matter based. Territorial jurisdiction refers to the 
geographical reach to which the jurisdiction of the Banking Court 
is extended (Sections 1(2) and 5 of the Ordinance). With respect to parties, 
the Banking Courts only have jurisdiction over a matter which 
involves a financial institution and a customer (Section 9(1) of the 
Ordinance), and both terms have been defined in Sections 2(a) and 
Civil Appeal No.1447 of 2016 
 
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(c) of the Ordinance respectively. The subject matter over which 
the Banking Courts have jurisdiction is the default (by a customer or 
financial institution) in fulfillment of any obligation with regard to any 
finance (Section 9(1) of the Ordinance), where the terms finance and 
obligation have been defined in Sections 2(d) and (e) of the 
Ordinance respectively. Undoubtedly the jurisdiction of the 
Banking Courts is special and exclusive and this is bolstered by 
Section 7(4) of the Ordinance which provides as follows:- 
 
“Subject to sub-section (5), no Court other 
than a Banking Court shall have or exercise 
any jurisdiction with respect to any matter 
to which the jurisdiction of a Banking Court 
extends under this Ordinance, including a 
decision as to the existence or otherwise of a 
finance and the execution of a decree passed 
by a Banking Court.”  
 
5. 
 
It is in this backdrop that we proceed to examine the 
various provisions of the Ordinance, the relevant parts whereof are 
reproduced below for ease of reference:- 
 
Financial Institutions (Recovery of 
Finances) Ordinance, 2001 
 
“7.      Powers of Banking Courts.-(1) 
Subject to the provisions of this Ordinance, a 
Banking Court shall: 
(a) 
in the exercise of its civil jurisdiction 
have all the powers vested in a civil Court 
under the Code of Civil Procedure, 1908 (Act 
V of 1908); 
 (b) 
…………………………………………… 
 
Civil Appeal No.1447 of 2016 
 
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(2) 
A Banking Court shall in all matters 
with respect to which the procedure has not 
been provided for in this Ordinance, follow 
the procedure laid down in the Code of Civil 
Procedure, 1908 (Act V of 1908), and the 
Code of Criminal Procedure, 1898 (Act V of 
1898). 
 
(3) 
…………………………………………… 
 
(4) 
…………………………………………… 
 
(5) 
…………………………………………… 
 
(6) 
…………………………………………… 
 
(7) 
…………………………………………… 
 
16. Attachment before judgment, injunction 
and appointment of Receivers.-(1) Where the 
suit filed by a financial institution is for the 
recovery of any amount through the sale of 
any property which is mortgaged, pledged, 
hypothecated, assigned, or otherwise charged 
or which is the subject of any obligation in 
favour of the financial institution as security 
for finance or for or in relation to a finance 
lease, the Banking Court may, on application 
by the financial institution, with a view to 
preventing 
such 
property 
from 
being 
transferred, alienated, encumbered, wasted or 
otherwise dealt with in a manner which is 
likely to impair or prejudice the security in 
favour of the  financial institution, or 
otherwise in the interest of justice 
(a) 
restrain the customer and any other 
concerned 
person 
from 
transferring, 
alienating, 
parting 
with 
possession 
or 
otherwise encumbering, charging, disposing 
or dealing with the property in any manner; 
(b) 
attach such property;  
Civil Appeal No.1447 of 2016 
 
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(c) 
transfer possession of such property 
to the financial institution; or 
(d) 
appoint one or more Receivers of 
such property on such terms and conditions 
as it may deem fit. 
 
(2) 
An order under sub-section (1) may 
also be passed by the Banking Court in 
respect of any property held benami in the 
name of an ostensible owner whether 
acquired before or after the grant of finance 
by the financial institution. 
  
(3) 
In cases where a customer has 
obtained property or financing through a 
finance lease, or has executed an agreement 
in connection with a mortgage, charge or 
pledge in terms whereof the financial 
institution is authorized to recover or take 
over possession of the property without filing 
a suit, the financial institution may, at its 
option:  
(a) 
directly recover the same if the 
property is movable; or  
(b) 
file a suit hereunder and the Banking 
Court may pass an order at any time, either 
authorising the financial institution to recover 
the property directly or with the assistance of 
the Court: 
 
Provided that in the event the 
financial institution wrongly or unjustifiably 
exercises the direct power of recovery 
hereunder it shall be liable to pay such 
compensation to the customer as may be 
adjudged by the Banking Court in summary 
proceedings to be initiated on the application 
of the customer and concluded in thirty days.  
 
Civil Appeal No.1447 of 2016 
 
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(4) 
Nothing in sub-sections (1) to (3) shall 
affect the powers of the Banking Court under 
Order XXXVIII Rules 5 and 6 of the Code of 
Civil Procedure, 1908 (Act V of 1908) to 
attach before judgment any property other 
than property mentioned in sub-section (1).   
 
19. Execution of decree and sale with or 
without intervention of Banking Court.-(1) 
Upon pronouncement of judgment and decree 
by 
a 
Banking 
Court, 
the 
suit 
shall 
automatically stand converted into execution 
proceedings without the need to file a 
separate application and no fresh notice need 
be issued to the judgment-debtor in this 
regard. Particulars of the mortgaged, pledged 
or hypothecated property and other assets of 
the judgment-debtor shall be filed by the 
decree-holder 
for 
consideration 
of 
the 
Banking Court and the case will be heard by 
the Banking Court for execution of its decree 
on the expiry of 30 days from the date of 
pronouncement of judgment and decree:  
  
Provided that if the record of the suit 
is summoned at any stage by the High Court 
for purposes of hearing an appeal under 
section 22 or otherwise, copies of the decree 
and other property documents shall be 
retained by the Banking Court for purposes of 
continuing the execution proceedings. 
 
(2) 
…………………………………………… 
  
(3) 
In cases of mortgaged, pledged or 
hypothecated 
property, 
the 
financial 
institution may sell or cause the same to be 
sold with or without the intervention of the 
Banking Court either by public auction or by 
inviting sealed tenders and appropriate the 
proceeds towards total or partial satisfaction 
Civil Appeal No.1447 of 2016 
 
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of the decree. The decree passed by a Banking 
Court shall constitute and confer sufficient 
power and authority for the financial 
institution to sell or cause the sale of the 
mortgaged, pledged or hypothecated property 
together with transfer of marketable title and 
no further order of the Banking Court shall be 
required for this purpose. 
 
(4) 
Where a financial institution wishes to 
sell mortgaged, pledged or hypothecated 
property by inviting sealed tenders, it shall 
invite offers through advertisement in one 
English and one Urdu newspaper which are 
circulated widely in the city in which the sale 
is to take place giving not less than thirty days 
time for submitting offers. The sealed tenders 
shall be opened in the presence of the 
tenderers or their representatives or such of 
them as attend: 
 
Provided that the financial institution 
shall be entitled in its discretion, to purchase 
the property at the highest bid received. 
 
(5) 
…………………………………………… 
  
(6) 
…………………………………………… 
 
(7) 
Notwithstanding anything contained in 
the Code of Civil Procedure 1908 (Act V of 
1908), or any other law for the time being in 
force: 
(a) 
the Banking Court shall follow the 
summary 
procedure 
for 
purposes 
of  
investigation of claims and objections in 
respect of attachment or sale of any property, 
whether or not mortgaged, pledged or 
hypothecated, and shall  complete such 
investigation  within 30 days of filing of the 
claims or objections;  
Civil Appeal No.1447 of 2016 
 
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(b) 
if the claims or objections are found 
by the Banking Court to be malafide or filed 
merely to delay the sale of the property, it 
shall impose a penalty upto twenty percent of 
the sale price of the property.  
(c) 
the Banking Court may, in its 
discretion, proceed with the sale of the 
mortgaged, or pledged or hypothecated 
property if, in its opinion the interest of 
justice so require:  
 
 
 
Provided that…………………………” 
(Emphasis added)  
 
Code of Civil Procedure, 1908 
 
“Order XXXIX Rule 6. Power to order 
interim sale.—The Court may, on the 
application of any party to a suit, order the 
sale, by any person named in such order, and 
in such manner and on such terms as it thinks 
fit, of any movable property being the subject-
matter of such suit or attached before 
judgment in such suit, which is subject to 
speedy and natural decay, or which for any 
other just and sufficient cause it may be 
desirable to have sold at once.” 
 
In case of a suit for the recovery of any amount through sale of 
property which has been pledged, hypothecated, etc. in favour of a 
financial institution as security for finance (or for or in relation to a 
finance lease), Section 16 of the Ordinance empowers a Banking 
Court to pass an order before judgment, upon an application by 
the financial institution, to prevent such property from being 
transferred, alienated, encumbered, wasted or otherwise dealt with 
in a manner which is likely to impair or prejudice the security in 
Civil Appeal No.1447 of 2016 
 
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favour of the financial institution or otherwise in the interests of 
justice. The types of orders that the Banking Court could pass are 
provided for in Section 16(1) of the Ordinance:- it may (a) restrain 
the customer (and any other concerned person) from transferring, 
alienating, parting with possession or otherwise encumbering, 
charging, disposing or dealing with the property in any manner; (b) 
attach the property; (c) transfer possession of such property to 
the financial institution; and (d) appoint one or more Receivers 
of such property on such terms and conditions as it may deem fit. 
Section 16(2) of the Ordinance empowers the Banking Court to 
pass similar orders to those mentioned in Section 16(1) ibid with 
respect to any property held benami in the name of an ostensible 
owner. Where movable property is concerned, Section 16(3) allows 
for direct recovery by a financial institution in cases where a 
customer has obtained property/financing through a finance lease 
or in those situations where the financial institution has been 
authorized to recover or take over possession of the property 
without filing a suit. The relevant provision for the purposes of the 
instant case is Section 16(1) of the Ordinance, a plain reading of 
which makes clear that the Banking Court does not have any 
power to sell goods which are pledged, hypothecated etc. prior to 
passing of the judgment in a suit for recovery through sale filed by 
the financial institution. The qualified powers given to the Banking 
Courts in this respect have been specifically mentioned in parts (a) 
to (d) of Section 16(1) of the Ordinance which are essentially orders 
of restraint, attachment, transfer of possession and appointment of 
Receiver(s). 
Section 16 ibid can be compared with Section 19 of the 
Ordinance, which provides for execution of decree and sale. In 
Civil Appeal No.1447 of 2016 
 
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juxtaposition with Section 16, Section 19(3) has specifically used 
the words sell/sold with respect to mortgaged, pledged or 
hypothecated property in terms of what the financial institution 
(with or without the intervention of the Banking Court) may do for the purposes 
of total or partial satisfaction of the decree. The use of the word 
sell in this Section [and the failure to use it in section 16 ibid] is 
indicative of the fact that the legislature used such word only 
where it  intended that sale be permitted. Thus the legislature has 
permitted a financial institution to sell goods only after it has 
attained a decree in its favour, for total or partial satisfaction 
thereof. Therefore, we are sanguine in our view that the absence of 
the words sale or sell (or any variant thereof) coupled with the 
specificity of the types of orders that a Banking Court can pass 
under Section 16, speaks to the legislative intent; that sale not be 
permitted during the pendency of a suit for recovery by sale before 
the Banking Court. 
6. 
 
This brings us to a discussion of Section 7 of the 
Ordinance. Sub-section (1) part (a) of Section 7 ibid provides that 
in exercise of its civil jurisdiction a Banking Court shall have all 
the powers vested in a Civil Court under the CPC. One may argue 
that since, in exercise of its powers under the CPC, a Civil Court is 
empowered to pass an order for interim sale of property, furnished 
as security to a financial institution, before the final determination 
of the case under Order XXXIX Rule 6 of the CPC or whilst 
exercising its inherent jurisdiction under Section 151 of the CPC, 
therefore by virtue of Section 7(1)(a), which is legislation by 
reference, the Banking Court too would possess such power. This 
view is incorrect because according to the principle of harmonious 
interpretation the special law would take precedence over the 
Civil Appeal No.1447 of 2016 
 
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general law (generalia specialibus non derogant). The Ordinance is a special 
law, and therefore its specific provisions   will displace the general 
law which shall be deemed to be inapplicable. Reference in this 
regard may be made to the judgment reported as Neimat Ali 
Goraya and 7 others Vs. Jaffar Abbas, Inspector/Sargeant 
Traffic through S.P., Traffic, Lahore and others (1996 SCMR 
826). This position is also supported in Section 4 of the Ordinance 
which provides that “the provisions of this Ordinance shall have effect 
notwithstanding anything inconsistent therewith contained in any other law for 
the time being in force”. The reason behind this is logical in that the 
legislature, having devoted attention to a special subject and 
provided for all the peculiar circumstances that may arise in 
respect thereof (the legislature is presumed to know the law when enacting 
legislation), it cannot intend to derogate from such special enactment 
by allowing the general law to override the special law, unless it 
does so through express and specific mention of its intention to 
that effect. Thus when Section 16 of the Ordinance has provided a 
comprehensive list of the specific types of orders (which do not include 
sale of property) that a Banking Court is empowered to pass with 
respect to property that is pledged, hypothecated etc. prior to the 
final judgment of a suit for recovery by sale, there is no doubt that 
such provision was intended to be all-inclusive, leaving no room to 
read in the power to sell by means of applying the general 
provisions of the CPC, i.e. Order XXXIX Rule 6 or the inherent 
powers under Section 151 of the CPC. However, the legislature did 
intend that nothing in sub-sections (1) to (3) of Section 16 should 
affect the powers of the Banking Court under Order XXXVIII Rules 
5 and 6 of the CPC to attach before judgment any property other 
than property mentioned in sub-section (1) and therefore 
Civil Appeal No.1447 of 2016 
 
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specifically provided for the above in Section 16(4) of the 
Ordinance. The saving of certain provisions of the CPC within 
Section 16, as done through Section 16(4), augments the view that 
the said section was meant to be comprehensive and it does not 
permit sale before judgment. 
This opinion is further bolstered by the fact that Section 7(1) 
of the Ordinance itself begins with the words “Subject to the provisions 
of this Ordinance, a Banking Court shall…”. Section 7(2) further clarifies 
and provides that:- 
 
“A Banking Court shall in all matters with 
respect to which the procedure has not been 
provided for in this Ordinance, follow the 
procedure laid down in the Code of Civil 
Procedure, 1908 (Act V of 1908), and the 
Code of Criminal Procedure, 1898 (Act V of 
1898).” 
(Emphasis supplied) 
 
Therefore a Banking Court is to follow the procedure laid down in 
the CPC in all matters with respect to which the procedure has 
not been provided for in the Ordinance, whereas the procedure 
to prevent property which has been pledged or hypothecated etc. 
from being transferred, alienated etc. has been duly and 
exhaustively provided for in Section 16 of the Ordinance(save for 
Section 16 (4) thereof). Therefore, to this extent the application of the 
CPC has been excluded. 
7. 
 
We now consider whether the second application filed 
by the respondent was liable to be dismissed on the ground of res 
judicata. There are several aspects to this issue. First, whether the 
principle of res judicata applies to applications or not; and second, 
Civil Appeal No.1447 of 2016 
 
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if the answer to the first question is in the affirmative, what is the 
scope of the application of such a principle? Res judicata is the 
Latin term for “a matter (already) judged” and entails the concept of 
claim preclusion; once a matter has been decided and adjudicated 
on merits by an adjudicatory body, the same cannot be raised 
again. The purpose of this principle is to create repose and to 
prevent multiple and possibly contradictory findings on the same 
issues and to curb unnecessary delays in proceedings. As regards 
civil proceedings, this concept is codified in Section 11 of the CPC. 
However, the said section specifically refers to ‘suits’ and therefore 
restricts the application of the principle thereto. Interlocutory 
applications can not be regarded as ‘suits’; hence, strictly speaking 
Section 11 of the CPC would not be attracted to such applications. 
Nevertheless, the general legal principles of res judicata would 
most certainly apply. Therefore an order passed pursuant to any 
interlocutory application at one stage of the proceedings would 
operate as a bar upon similar interlocutory applications made at a 
subsequent stage of the proceedings based on the general 
principles of res judicata.1 However this general rule will not apply 
where the order on such interlocutory application does not involve 
any adjudication. Examples of such instances are:- where there is 
no decision on merits, but a mere expression of opinion not 
necessary for the disposal of the application;2 where a matter, 
though in issue has, as a fact, not been heard and decided, either 
actually or constructively;3 where a matter in issue has been 
                                                
1 The Code of Civil Procedure (1908) as amended by Act 104 of 1976 by W. W. Chitaley and V. B. 
Bakhale. 
2 Aruguma Thamviran and others Vs. Namasivaya Pandara Sannadhi and others (AIR 1926 Mad 
162). 
3 Jairam Kissan Vs. Chandrakaladevi and others (AIR 1974 Bom 49). 
Civil Appeal No.1447 of 2016 
 
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expressly left open and undecided;4 where the suit is not pressed; 
or where the suit is withdrawn.5 A further exception is highlighted 
in the case of Amanullah Khan and others Vs. Khurshid Ahmad 
[PLD 1963 (W.P.) Lah 566], which holds that where an application 
has been decided once, but subsequently a fresh application is 
made on facts and circumstances different from those which 
existed earlier, res judicata would not apply. In this context the 
case reported as Mst. Sarkar Khano A. Molo Vs. Abdul Malik 
Rehmanah20tullah Kasim Lakha through L.Rs. and others 
(2016 YLR 1506) is germane which holds that the change of the 
status of a suit property, even during the pendency of a suit, could 
be pressed as a fresh ground to re-present an application, even in 
the event of the existence of an earlier order on an application of 
the same nature or title. We find it pertinent to make reference to 
the case of Arjun Singh Vs. Mohindra Kumar and others (AIR 
1964 SC 993) wherein it was held that interlocutory orders such 
as orders of stay, injunction or receiver which are designed to 
preserve the status quo during the pendency of the litigation and 
to ensure that the parties may not be prejudiced by the normal 
delay occasioned in the proceedings before the Court, do not decide 
in any manner the merits of the controversy in issue in the suit 
and are capable of being altered or varied by subsequent 
applications for the same relief, but only on proof of new facts or 
new situations which subsequently emerge.  The Indian Supreme 
Court drew a fine but elegant distinction between the rule of res 
judicata and a rejection on the ground that no new facts have been 
adduced to justify a different order. It held that if the decision on a 
                                                
4 Parsotam Gir Vs. Narbada Gir [(1899) ILR 21 All 505]. 
5 Ghulam Nabi and others Vs. Seth Muhammad Yaqub and others (PLD 1983 SC 344); 
Muhammad Akram and others Vs. Member, Board of Revenue and another (2007 SCMR 289). 
Civil Appeal No.1447 of 2016 
 
-: 19 :- 
 
particular issue of fact is based on the principle of res judicata 
even if fresh facts were placed before the Court, the bar would 
continue to operate and preclude a fresh investigation of the issue, 
whereas in the other case, on proof of fresh facts, the court would 
be competent, indeed would be bound to take those into account 
and make an order in conformity with the new facts. Thus in our 
view, the proof of new facts or circumstances is necessary in order 
to exclude the application from the bar of res judicata in respect of 
interlocutory applications during the pendency of a suit. A further 
exception is where an application is dismissed as being premature; 
this is not a decision on merits and would not operate as res 
judicata. A case in point is Banwari Lal Radhe Moham Vs. Punjab 
State Co-operative Supply and Marketing Federation Ltd. (AIR 
1983 Delhi 86) wherein it was held that the application for 
injunction against encashment of bank guarantee did not bar the 
second application seeking the same relief as the first application 
was premature and held to be not maintainable for the reason that 
no demand for encashment of guarantee had been made at the 
time of the first application. 
In the instant matter, the order dated 16.4.2013 dismissing 
the first application filed by the respondent seeking sale of the 
goods did not adjudicate on merits, rather the Banking Court 
specifically termed the said application premature. This clearly 
leaves the matter to be decided at a later stage. Further, the 
subsequent application filed by the respondent seeking sale of the 
goods indicates a development in that the keys of the godown 
where the goods were located were no longer with the muccadam of 
the bank, hence their apprehension that the appellant might 
misappropriate the goods, which circumstances did not prevail at 
Civil Appeal No.1447 of 2016 
 
-: 20 :- 
 
the time of the first application. We are of the view that the 
argument by the learned counsel for the appellant that the second 
application was barred by the principle of res judicata is 
misconceived. The case of Hashir Ahmad (supra) relied upon by the 
learned counsel for the appellant is a leave refusing order and is 
thus not the law laid down by this Court. 
8. 
 
In light of the above, the order for sale of the goods in 
question passed by the learned Single Judge-in-Chambers and the 
order upholding such order of sale in appeal passed by the learned 
Division Bench of the Banking Court are illegal, being in violation 
of the provisions of Section 16 of the Ordinance. Therefore, this 
appeal is allowed and the impugned order is set aside. 
9. 
 
Before parting it may be observed that the matter is 
pending before the Court for the last five years, yet leave 
application has not been decided. We direct the Banking Court 
(where the case is statedly pending now) to decide the matter within one 
month from the date fixed for hearing before the Court without fail. 
Till the final decision upon the leave application, Mr. Salman 
Aslam butt, learned counsel for the appellant has undertaken that 
the stocks lying in godown Nos.9 and 11 shall not be removed or 
disposed of. The criminal original petition is accordingly disposed 
of. 
 
 
CHIEF JUSTICE 
 
 
JUDGE 
 
 
JUDGE 
Islamabad, the 
2nd of January, 2018 
Approved for reporting 
Waqas Naseer