1985 PLP 499 (MLD)

By this judgment I propose to dispose of two constitutional petitions (W.P. Nos.4381 of 1982 and 4580 of 1982) as both these petitions are directed against the orders dated 5-1-1982 and 16-9-1982 of the learned Special Judge Banking, Lahore.

2. The relevant facts, briefly stated, are that a suit for the recovery of Rs.44,95,039 was filed by the respondent-Bank against the petitioners and M/S. A.B.M. Associates Ltd. The loan is outstanding, it appears, since 1975 when M/S. Premier Cloth Mills Ltd. Faisalabad (now defunct) imported parts /accessories of Textile Machinery from United Kingdom for the declared value of L 68,756 on the basis of letter of credit dated 18-2-1975. Before the machinery could be released to the aforesaid .Company, a petition Civil Original No.16 of 1975 under section 153/153-A of the Companies Act was filed for sanctioning arrangement of reconstruc tion and reorganization. The Premier Cloth Mills Ltd. was reconstituted into three companies viz.- (i) M/S Zulfiqar Associates Limited Dijkot Road, Faisalabad. (ii) Hudaybia Textile Mills Limited, Nazimabad, Faisalabad. (iii) A.B.M. Associates Limited Dijkot Road Mian Muhammadabad, Faisalabad. These three companies, so reconstituted, accepted joint and several liability to pay the debts of the creditors. The arrangement as to reconstitution was allowed by the learned Company Judge vide order dated 26-3-1976. The loan remained outstanding since then, so the suit was filed. The petitioners after service of notice of the suit submitted Applications under Order XXXVII, rule 3, C.P.C. for leave to appear and defend the suit. In the application filed, by the petitioners (of Writ Petition No.4381/82) stated that they were liable to repay 1/3rd of the amount incurred in import of machinery by the plaintiff-Bank in accordance with the resolution of shareholders dated 3-3-1976, as approved by the High Court vide judgment dated 26-3-1976 and that on payment of the proportionate liability they are entitled to the release of the 1/3rd of the imported machinery. It was further mentioned therein that they were ready and willing to create debentures in favour of the plaintiff-Bank for which the Bank had in earlier meetings given its consent. The petitioners in the other writ petition in their application under Order XXXVII, rule 3, C.P.C. asserted that the Bank had not rendered true and faithful account of the transaction in question; that the petitioner-company had not taken any loan from the plaintiff-Bank but it was sought to be settled with the liability of Messrs Premier Cloth Mills Ltd. which could not be done at least in its entirety (underlining is mine). The learned Special Judge after hearing the parties granted leave to defend the suit vide order dated 5-1-1982 to the defendants on the condition of deposit of 1/3rd of the suit amount by each set of these defendants. It is pertinent to note at this stage that one of the defendants reconstituted company i.e. A.B.M. Associates Ltd. 'went into liquidation and on account of appointment of Liquidator, the said company under liquidation was deleted from the array of defendants of the suit. For this very reason, the petitioners sought deletion of the said company from the array of respondents of these. constitution petitions and was accordingly deleted vide order dated 19-12-1982.

3. The petitioners statedly filed a review petition before the Special Judge Banking but the same was rejected vide order dated 16-9-1982. These orders are under challenge in these constitution petitions on the grounds; that where a loan is secured or a defendant has been able to make out a prima facie case, leave has to be granted without attaching any condition. Reliance was placed on Muslim Commercial Bank Ltd. v. Tayab Sharif 1975 S C M R 393; Continental Syndicate of Trade v. The International Express Co., Ltd. P L D 1959 Kar. 252; Messrs Shahzad Ice Factory and 2 others v. Special Judge Banking (II), Lahore and another P L D 1982 Lah.

92. The view expressed by the learned Single Judge in the case of Messrs Shahzad Ice Factory and others was dissented from in the case of Messrs Salman Mehmood Cotton Ginners, Kabirwala and 2 others v. Special Judge Banking (II) and another P L D 1982 Lah. 353 which is a judgment delivered by another learned Single Judge.

4. For the disposal of these petitions, the question of scope of interference in constitutional jurisdiction with interlocutory orders need not be gone into as on merits I am of the considered view that the orders passed by the learned Special Judge (Banking) are justified in law as well as on facts established on record. The grant of leave is regulated by Order XXXVII, rule 3, C.P.C. which rule confers a discretion on the Court to attach or not to attach conditions while A granting leave to defend the suit. The exercise of discretion one way or the other by a Court of competent jurisdiction cannot ordinarily be interfered with in exercise of constitutional jurisdiction until the Court has acted in a perverse, fanciful or arbitrary manner. It will be recalled that the liability to the extent of 1/3rd was admitted clearly by the petitioners namely Zulfiqar Associates Ltd. while the petitioners i.e. Hudaybia Textile Mills Ltd. did not directly and specifically deny their liability to pay the loan as the assertion made was that they were sought to be saddled with the liability of Messrs Premier Cloth Mills Ltd. which cannot be done atleast in its entirety. It is not denied that the learned Special Judge (Banking) did not saddle them with the entire liability as 1/3rd of the amount sued was ordered to be deposited by each of reconstituted companies i.e. each of the defendants. The submission that as the loan is a secured loan, condition of deposit is not to be attached, cannot be accepted. The parts and accessories were imported in the year 1975 and till date no effort was made to have them released by making payment. Whether those parts are now of any practical utility or of value in market, is yet to be seen. Learned counsel during arguments offered that these imported parts and accessories may be sold and the amount be recovered but then he withdrew the said offer and stated that he would like to argue the case on legal plane.

5. As regards the allegation that the amount claimed in the suit is exorbitant, suffice it to say that nothing was stated to show as to how the amount was exorbitant or excessive. I asked the learned counsel whether the petitioners had at any time before the institution of the suit protested against the amount outstanding in the books of the Bank. The answer given was that presently he was not in a position to say anything or to produce any document in that respect. All these B factors have led me to conclude that the discretion exercised by the learned Special Judge Banking is justified in law. No interference, as such, is called for in exercise of constitutional jurisdiction These petitions are, therefore, dismissed with costs. A. A. Petition dismissed.