2014 PLP 198 (CLD)

MRS. AYESHA A. MALIK, J.

This is an appeal under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (F.I.O. 2001) for setting aside the impugned order dated 6-9-2012 passed by Banking Court No.II, Lahore.

2. The facts in this case are that the respondent availed a lease finance facility of Rs.1,582,800 on 12-3-2011 from the appellant, Bank of Punjab, Gul AKRA Plaza Branch, Rawalpindi for purchasing a Honda Civic, VTI Oriel having registration No.ICT-RF-590 chassis No.127399 engine 7987398 Model 2011 and for purchasing a Suzuki Alto VXR CNG Model 2011 registration No.RK-613 engine No.PKR 278844 chassis No.RA -410PK 582-847. As per the Lease Agreements, the respondent was required to pay monthly lease instalments. The respondent defaulted in paying the lease instalments, therefore, the appellant re-possessed the Honda Civic VTI Oriel from the respondent. The respondent filed a suit for declaration and permanent injunction before the Banking Court under section 9 of the F.I.O. 2001. Notices were issued on 9-8-2012 for 16-8-2012 and interim order was issued whereby the vehicle was not to be put up for auction until the next date of hearing. On 16-8-2012 the appellant appeared before the Banking Court No.II wherein it was directed that the appellant submit its statement of account and power of attorney. The appellant submitted the same before the court on 28-8-2012 and the case was adjourned for 5-9-2012. The appellant sought permission to file application for leave to defend, however, no opportunity was given to the appellant. The case was again adjourned to 6-9-2012. On 6-9-2012 an interim order was passed wherein it was held that since the plaintiff was willing to pay the instalments, the Bank was to hand over possession of the vehicle to the plaintiff subject to payment of the defaulted instalments plus re-possession charges of Rs.15,000 within ten days. The account statement was also delivered to the plaintiff. With these directions, the case was disposed of.

3. The case of the appellant is that the Banking Court did not follow due process as prescribed under the F.I.O. 2001. The Banking Court was required to act strictly in accordance with the procedure laid down in the sections 9 and 10 of F.I.O. 2001 and could not have disposed of the suit as per the impugned order of 6-9-2012. Learned counsel for the appellant further argued that the notice that was issued to the Bank was not in terms of section 9 of the F.I.O. 2001. It was a simple notice issued on the interim order that was passed on 9-8-2012. Learned counsel further argued that by allowing the respondent to pay the instalments and directing the appellant to return the vehicle, the Banking Court denied the appellant the right of hearing, the right to file a preliminary leave application, the right to respond to all the facts and the legal issues raised by the plaintiff. He further argued that by directing the vehicle to be returned to the plaintiff, the Banking Court in fact had granted the plaintiff its relief as prayed for in the suit without following the prescribed procedure and without giving the appellant an opportunity to present its case before the Court.

4. We have heard the learned counsel for the parties and reviewed the record available on the file.

5. The impugned order reads as follows:-- "The plaintiff has stated that he is the defaulter of some instalments and, now he is ready to pay the same. So, the instant suit is disposed of with the direction to the defendant bank to hand over the possession of the vehicle to the customer, subject to payment of the defaulted instalments pending by this date plus repossession charges Rs.15,000 within 10 days, definitely. Account statement be also delivered to the plaintiff within the aforesaid specific time." The order shows that the Banking Court No.II accepted the statement of the plaintiff that he was in default of the lease instalments yet was ready to pay the instalments. On the basis of this statement, the suit was disposed of with a direction to the Bank to hand over the possession of the vehicle subject to payment of the defaulted instalments and repossession charges within ten days. We are of the opinion that the Banking Court has erred in law by neglecting to follow the prescribed procedure under the F.I.O. 2001. A suit is filed under section 9 of the F.I.O. 2001 and notices are issued on the presentation of the plaint to the Banking Court under section 9(5) of the F.I.O. 2001. The notices are to be issued in form No.4 in the Appendix 'B' to the Code of Civil Procedure, 1908 or any other form as may be prescribed in the rules. Four modes have been prescribed and all four modes have to be used by the Banking Court to effectuate service on the defendants. The Banking Court is also required to ensure that summons are published in one english and one urdu newspaper with wide circulation within its territorial limits. In the instant case, the basic steps on institution of a suit, which are mandatory under F.I.O. 2001 were totally ignored by the Banking Court. Under the F.I.O. 2001 on the presentation of a plaint notices must be issued in terms of section 9(5) of the F.I.O. 2001. There is no provision in the F.I.O. 2001 to issue simple notices to the defendants. When summonses have been served on the defendant, the defendant is entitled to defend the suit under section 10(1) of the F.I.O. 2001. This is a right given to the defendant under the F.I.O. 2001 wherein the defendant shall file an application for leave to defend within thirty days from the date of first service by any one of the modes laid down in subsection (5) of section 9 of the F.I.O. 2001. In the instant case the Banking Court failed to give the defendant the opportunity to defend the case under section 10 of the F.I.O. 2001 in the form of a preliminary leave to defend application.

6. The record shows that the suit was filed by the respondent seeking a declaration that the acts of the Bank of repossessing the vehicle are illegal and unlawful; directing the Bank to render true and faithful statement of accounts; a permanent injunction not to auction the repossessed vehicle and to hand over the possession of the repossessed vehicle to the plaintiff. By virtue of the impugned order the Banking Court has accepted the statement of the respondent that he is a defaulter of some instalments, has granted him an opportunity to pay defaulted instalments along with repossession charges and directed the Bank to hand over the possession of the vehicle subject to payment of the defaulted instalments. To our minds the Banking Court has granted the respondent his final relief without giving the appellant Bank an opportunity to file its preliminary leave to defend application as stipulated under section 10 of F.I.O. 2001 and without hearing the case of the appellant Bank against whom the respondent was seeking its relief. Furthermore we find that the Banking Court has failed to take into consideration that under the F.I.O. 2001, the Banking Court has to determine, in the first instance whether or not the defendant should be granted leave to defend in the case as some substantial question of law and fact have been raised for which evidence needs to be recorded. Once leave to defend has been granted, issues have to be framed relating to the substantial questions of law and fact, evidence has to be recorded and thereupon disposal of the suit under section 10(10) of the F.I.O. 2001. The Banking Court could not have disposed of the suit as per the impugned order of 6-9-2012. The Banking Court under the F.I.O. 2001 had to exercise its jurisdiction strictly in accordance with the F.I.O. 2001. We find that the Banking Court has neglected to follow the prescribed procedure which is mandatory under the Ordinance.

7. Therefore in view of the aforesaid, this appeal is allowed, the impugned order dated 6-9-2012 is set aside with no order as to costs. The suit of the respondent is deemed to be pending before the learned Banking Court No.II, Lahore. The Banking Court shall treat it as afresh suit and proceed with the suit strictly in accordance with the F.I.O. 2001. KMZ/B-33/L Appeal allowed.