P L D 1984 Lahore 421 (PLP)

Mian Abdur Rashid for Respondent No.

1. M. A. Khadim for Respondents Nos. 3 and

4. Date of hearing: 12th February, 1984. MUHAMMAD AFZAL LONE, J.‑‑Habib Bank Limited sued the appellants for recovery of Rs. 2,58,973.75 with interest. The latter applied to the learned Special Judge (Banking), in contemplation .of section 7(2) of the Banking Companies (Recovery of Loans) Ordinance, 1979, for grant of permis sion under Order XXXVII, rule 3, C. P. C. to defend the suit. But the learned Special Court, by its order, dated 22‑1‑1981, rejected their application, proceeded to record the plaintiff's evidence and decreed the suit on the same date. The validity of its judgment and decree dated 2L‑I‑1981, has been called in question by the appellants through this appeal, under section 12 of the Ordinance.

2. Briefly, the facts constituting the background of this litigation are; that Messrs Sargroh Vegetable Ghee and General Mills, appellant No. 2, herein, imported some oil, through Pakistan Banaspati Manufacturers Associa tion, on joint purchase basis. In this connection, a joint letter of credit was opened, on behalf of the members of Association. On the request of appellant No. 2 in its capacity as member of the Association, the plaintiff Bank furnished bank guarantee to the. National Bank of Pakistan Limited, to cover the value of the imports, falling to the share of the appellant. Consequently, the bank extended credit facility to the appellant‑Mill and financed two. L. I. M. accounts, opened in this behalf. The mill was an individual proprietorship wholly owned by respondent No. 2 and respondent No. 3 was its manager, at the relevant time. On the promulgation of Hydro genated Vegetable Oil Industry (Control and Development) Act, 1973, the concern was taken over by the Federal Government and its control transferred to Ghee Corporation of Pakistan i. e. appellant No. 1.

3. It was under these circumstances that the Federal Government and the Ghee Corporation were also sued. In their application for grant of permission to defend the suit, the appellants challenged the jurisdiction of the special Court and. further contended that the suit was barred under the provisions of the Act aforesaid. They also disputed their liability on the factual plan and pleaded that the debt as outstanding in May, 1973, against the appellants stood liquidated by S. N. T. V., three receipts for Rs. 4,07,000 which had been pledged and duly discharged in favour of the bank by the ex‑proprietor. Thus, on these contentions, as well as on some other grounds, the appellants completely denied the entire liability. The order dated 22‑1‑1981 which devotes hardly ‑ three lines, to the disposal of the application, indicates that the sole reason which prevailed with the learned Special Judge, in refusing the leave was, that the loan had been obtained by an establishment, which was nation alised; the appellants were, therefore, bound to clear the debt. Thus, in his opinion, there was nothing to contest the suit.

4. We have perused the record. The judgment and decree under appeal, have been impugned on the score that in their application, the appellants had raised certain questions of law and facts but the learned special Court did not advert to the same and by a short and lacunic order, chose to reject the same. The appellants' learned counsel vehemently argued that they had a plausible defence to contest the suit but the learned Court below, without applying its mind to the issues urged by them, improperly declined the permission. For his these submissions he endeavoured to enlist support from the Supreme Court's judgment in Fine Textile Mills Ltd. v. Haji Umar (P L D 1963 S C163) wherein it has been observed that if the defendant puts forth a bona fide allegation of a triable issue, urging a substantial question of fact or law, he is entitled to defend the suit.

5. As we propose to remand this case to the learned special Court, to pass a fresh order, according to law, on the question of grant of permission to defend the suit, we avoid to comment upon the merits of the application. We would, however, like to observe that the points urged by the appellants for seeking the leave, can by no means be characterized as frivolous or an idle formality, not worthy of entailing any serious consideration of the special A Court. Apart from the jurisdictional issue, they categorically asserted that the debt stood adjusted against the S.N.T.D. receipts which had duly been discharged in favour of the bank and thus, their liability was extinguished. The learned Special Judge, however, failed to visualise the potentiality of the grounds and was dominently influenced by the sole factor as to the Federal Government's liability in respect of the taken over industry. It was incumbent on him to have ascertained the various pleas set down in the application and taken note of the dimentional defence intended to be put up by the appellants. Indeed, the matter required a deeper consideration than the perfunctory attention conferred on it by the learned special Court.

6. On behalf of the respondent‑Bank it is canvassed that though the order dated 22‑1‑1981 is short one but it manifests proper application of mind by the learned Special Judge Banking and the conclusion arrived at by him does not lack in soundness inasmuch as the debt raised by appellant No. 2, after nationalisation of the mill, had to be repaid by the Federal Government or for that matter appellants Nos. 1 and 2.

7. We have not been persuaded by this submission. Having been entrusted with the onerous duty of deciding the money suit involving sub stantial amount, the learned Special Court should have exercised jurisdiction in a .judicial manner and render‑.d a speaking order qua the grounds on which the permission was solicited. It goes without saying, if an order i subject to the scrutiny by the appellate Court, the subordinate Courts' t adjudication must reflect its application of mind objectively, to the points urged before it so, that the appellate Court is benefited by the lower Courts' view, in evaluating the latter's decision. It is equally necessary that the part against whom a pronouncement is made must be adequately informed of the case he is required to meet.

8. We regret to state that the order dated 22‑1‑1981, on which the impugned judgment and decree are founded, does not disclose proper application of mind by the learned Special Judge (Banking) and it is not possible to infer that be was alive to the various grounds embodied to their application by the appellants. Needless to mention that in an appeal against the final judgment and decree, the appellate Court can examine the correctness of at intermediate orders, affecting the final decision of the suit. The illegality with which the order made on the application is visited, is patent on the face of the record. The judgment and decree passed on the footing of such an order are also liable to be set aside.

9. We, therefore, accept this appeal and set aside the judgment and decree of the learned Special Judge (Banking). The case is sent back to him to dispose of the application in question, afresh in accordance with law. The parties are left to bear their own costs. As the appeal has succeeded the bank guarantee furnished by the appel lants in pursuance of section 12(5) of the Banking Companies (Recovery of Loans) Ordinance, 1979, stands released in favour of the appellants. M. Z. M. Appeal accepted.