2015 PLP 477 (CLD)

SHAHAB SARKI, J.

This first appeal has been filed impugning the judgment dated 23-12-2009 and the consequent decree dated 24-12-2009 passed in Suit No.101 of 2005 Re. Messrs Allied Bank Limited v. Messrs Al Fatah Cotton Ginners and Oil Mills and others passed by the Banking Court-I, Sukkur.

2. The present appellants were defendants Nos.1 and 2 in the subject suit. The brier facts leading to this appeal are that the respondent No.1 filed a Suit against the appellants and others for recovery of Rs.27,873,295 stating therein that the appellants had obtained certain financial facilities from the respondent Bank and submitted the requisite security/collateral. Thereafter the appellants and others did not repay the said financial facility as agreed and committed default, whereupon the respondent Bank filed the subject suit.

3. It is borne out from the record that the service was effected by publication in two Daily Newspapers namely "The Nation" and "Jissarat" both dated 1-7-2005. The present appellants filed application under section l0(3) of F.I.O., 2001 along with an Application under section 5 of the Limitation Act on 31-8-2005. The objections on these applications were filed by the respondent Bank on 7-3-2007, whereafter an order dated 27-10-2009 was passed by the Banking Court-I, Sukkur whereby the Applications under section 10 of the F.I.O., 2001 and under section 5 of the Limitation Act were dismissed in absence of the counsel for the appellants. Thereafter on 23-12-2009 the impugned judgment was passed and the suit of the respondent No.1 (plaintiff) was decreed for the prayed amount.

4. Mr. Manoj Kumar Tejwani, learned counsel for the appellants, has mainly argued on the point that the appellants were never heard by the Banking Court and the application for Leave to Defend filed by the appellants along with an application under section 5 of the Limitation Act were never considered by the said Banking Court. He contends that in the application under Limitation Act he had specifically mentioned that service was never effected upon the appellants therefore they had no knowledge about the pendency of the case. The learned counsel has also specifically mentioned that the appellant No.2 firstly came to know about the pendency on or about 2-8-2005, when the Manager of the respondent No.1 disclosed to him the fact that the Bank had filed a recovery suit, which is fixed on 4-8-2005. The learned counsel further stales that he duly appeared before the Court on 4-8-2005 and submitted an application for adjournment and for supply of copies, which were duly received by him and thereafter on 31-8-2005, within 29 days of knowledge, he filed both the applications i.e. the Application under section 10 of the F.I.O., of 2001 as well as the Application under section 5 of the Limitation Act. The Banking Court issued notices on the said applications of the appellants on 31-8-2005 and these applications were finally decided on 27-10-2009. The learned counsel further contends that on the said date of hearing, he was not available before the Court due to some misunderstanding regarding the date of hearing but the Banking Court proceeded in decide the applications in his absence without affording him an opportunity of hearing. The learned counsel further contends that the Banking Court has fallen in error and has passed the order dated 27-10-2009 in a cursory manner without taking into consideration the provisions of law and has dismissed the applications in a perfunctory manner. In support of his contentions, he has placed reliance upon the following case-law:-- (1) 2009 CLD 849 (Mubarak Ali v. First Prudential Modaraba). (2) 2009 CLD 342 (Messrs Aamer Enterprises (Pvt.) Ltd., and 3 others v. Messrs United Bank Limited and another). (3) 2010 CLD 442 (Faysal Bank Limited v. Badin Road Mills and 6 others). (4) 2002 CLD 423 (Malik Muhammad Ayaz v. Messrs United Bank Limited and others).

5. Mr. Rasool Bux I, Siyal, Advocate the learned counsel for the respondent No.1 has argued that the appellants were served through all the prescribed modes and the legal requirement for effecting service had been duly been complied with. He has further argued that a patently time barred application for Leave to Defend was filed by the present appellants and the same was rightly dismissed by the Banking Court. He has further argued that the misunderstanding regarding the date is not a ground for condoning the delay and the Banking Court had rightly dismissed the applications of the appellants and has placed proper reliance on the relevant law.

6. We have heard the learned counsel for the parties, perused record and have gone through the case-laws referred before us.

7. Before proceeding any further it would be expedient to examine section 10 of the F.I.O., 2001 and more particularly subsection (2) thereof, which reads as under:-- "(2) The defendant shall file the application for leave to defend within thirty days of the date of first service by any one of the modes laid down in subsection (5) of section

9. Provided that where service has been validly effected only through publication in the newspapers, the Banking Court may extend the time for filing on application for leave to defend if satisfied that the defendant did not have knowledge thereof".

8. The Banking Court has placed heavy reliance upon subsection (2) and decided the application of the appellants by observing that the time granted for filing an application for Leave to Defend is 30 days from the date of first service by any one mode and has further observed that since publication was effected on 1-7-2005, therefore the application should have been filed within 30 days thereof. In doing so, the Banking Court has completely ignored the proviso to this subsection, which specifically states that where service has been "validly effected" only through publication then the Banking Court may extend the time for filing an application under section 10 of F.I.O., 2001. The wisdom behind this proviso is that there could be occasions where, in certain remote areas, newspapers do not have wide circulation therefore there could be a possibility that the person upon whom the service is to be effected may not be able to lay his hands or get the information which has been published in a particular newspaper. Had the service been duly effected through the other modes then, in our view, this proviso will not have any application. In the instant case the Banking Court has not considered whether the appellants were duly served through the other modes as well and therefore in our view, a miscarriage of justice has taken place. The Banking Court has also not considered whether the newspapers, in which the said publications were made, have wide circulation in the area where the appellants reside.

9. On the basis of above order dated 7-10-2009 the Banking Court has passed the impugned judgment and decree and the entire claim of the respondent No.1/plaintiff has been allowed and the suit was decreed. In our view even if a Leave to Defend application of the appellants is dismissed, the Banking Court should have considered the matter in it's entirety and in juxtaposition with the claim of the Bank and thereafter should have passed a judicial order. In this regard we are fortified by a judgment reported as 2010 CLD 651 (Bankers Equity Limited and 5 others v. Messrs Bentonite Pakistan Limited through Chief Executive and 7 others), where a Division Bench of Lahore High Court observed as follows:-- "

18. The contention of the learned counsel for the appellants that after the dismissal of the petition for leave to appear by the Judge Banking Court, the suit of the plaintiffs should have been decreed automatically is not correct. The Courts of law are under a legal obligation to apply their mind and correct law notwithstanding the fact that defendant in the suit has appeared or not before the Courts during the proceedings". The honourable apex Court in the case of Appolo Textile Mills Ltd. and others v. Soneri Bank Ltd. 2012 CLD 337, observed as follows:-- "Consequent upon the rejection of the leave petition, the defendants were deemed to have admitted the contents of the plaint. The defendants remained bound thereto. The Court of course was not so bound. It was not expected to proceed blindfolded. The court therefore in performance of its duty, itself examine in the said cases (as in this case) the plaint along with documents to decide as to whether the suit complied with the mandatory provisions of section 9 ibid or not and as to the nature of the order, judgment or decree to be passed by the Court".

10. In the instant case neither the Banking Court considered the proviso to subsection (2) of section 10 of F.I.O., 2001, nor has examined the contents of the plaint in a judicial manner. Even if a leave to defend application is not filed, or has been filed but rejected, the Banking Court has to pass a well-reasoned and speaking order and has to examine the plaint on the touchstone of section 9 of F.I.O., 2001 and see whether it complies with the prescribed mandatory provisions of law. The upshot of the discussion is that the instant appeal is allowed and the judgment dated 23-12-2009 and the decree dated 24-12-2009 passed by the Banking Court-I, Sukkur in Suit No. 101 of 2005, is set aside. The order dated 27-10-2009 is also set aside and the matter is remanded back to the Banking Court-I, Sukkur to decide the applications under section 10 of the F.I.O., 2001 and under section 5 of the Limitation Act filed by the appellants afresh, after affording an opportunity of hearing to all the parties, preferably within two months of the receipt of this order.

11. Appeal stands disposed of in the above terms. KMZ/A-140/Sindh Appeal allowe