Sitting Panel: Sh. Riaz Ahmad, Mian Muhammad Ajmal and Tanvir Ahmed Khan, JJ

Summary:

This case involved civil petitions for leave to appeal filed by Messrs Dadabhoy Cement Industries Ltd. and others (petitioners) against a judgment of the High Court of Sindh, Karachi. The High Court had dismissed their applications challenging a consent decree previously passed between the petitioners and the National Development Finance Corporation (respondent). The original suits, one for redemption of mortgaged property and another for loan recovery, had been disposed of through a Memorandum of Understanding (MOU) that was subsequently made a rule of the court, resulting in the consent decree. Under the MOU, the petitioners agreed to repay the loan in quarterly installments, with the entire outstanding amount becoming immediately due upon default. After paying four installments, the petitioners ceased payments and sought to invalidate the consent decree under Section 12(2) of the Civil Procedure Code, alleging fraud, misrepresentation, and lack of jurisdiction.

The Supreme Court dismissed the petitions for leave to appeal, upholding the High Court’s judgment. The Court found that the consent decree did not suffer from any defects such as fraud, misrepresentation, or want of jurisdiction, making the applications under Section 12(2) C.P.C. incompetent and unsustainable. Furthermore, the petitioners attempted to invoke the provisions of the Corporate and Industrial Restructuring Corporation Ordinance, 2000 (CIRCO), which had come into force during the pendency of their applications. However, the Supreme Court ruled that since the consent decree was passed on February 18, 1998, well before the CIRCO came into effect on September 22, 2000, its provisions could not retrospectively apply to invalidate a lawfully and validly passed consent decree. The Court found no grounds to interfere with the well-reasoned judgment of the High Court.

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