2000SCMR95 (PLP)

MAMOON KAZI, J.

Respondent, Habib Bank Limited, filed a suit in the High Court against the appellants under the Banking Companies (Recovery of Loans) Ordinance, 1979, for recovery of an amount of Rs.1,19,27,191.57. A decree for the said amount was sought to be obtained together with interest at four per cent per annum over the bank rate with a minimum of fourteen percent per annum with -quarterly rests from 1-6-1989 till payment of the decretal amount. A preliminary decree in Form.5-A, Appendix 'D' as incorporated in the First Schedule to the Civil Procedure Code and provided by Order XXXIV, Rule 4, C.P.C., had also been prayed for.

2. The appellants applied for leave to appear and defend the suit which was granted by the learned Judge in Chambers in the following terms:

"Leave is, therefore, granted to the defendants to appear and defend the suit subject to furnishing security for the amount claimed in the suit. Security to be furnished within one month. The defendants will, however, be at liberty to tender all or any of the properties mentioned in the suit as security."

3. Pursuant to the said order, the appellants tendered two properties mentioned in the impugned order, but the Nazir raised objection that the said properties were not sufficient to meet the plaintiffs' claim of future interest in the suit. The matter was taken up by 'the learned Judge in Chambers and the reference made by the Nazir in this regard was confirmed by the impugned order dated 23-1-1994. 3-A Leave was granted by this Court on the questions, whether by the leave granting order dated 5-4-1993, the amount for which security was required by the Court included interest upto the date of filing of the suit or till the date of passing of the said order.

4. We have heard Mr. Faizuddin, learned counsel for the appellants and Mr. A.S. Pinger, learned counsel for the respondent. The only contention raised by Mr. Faizuddin was that interest is prohibited by Islam. However,' such question is not in issue, as is indicated by the leave granting order. Mr: A.S. Pinger, on the other hand, has fully supported the impugned order.

5. It may be pointed out at the very outset that, as the suit was filed under the Banking Companies (Recovery of Loans) Ordinance, 1979, the provisions of Order XXXVII in the Civil Procedure Code were applicable to it. Rule 3 in the said Order provides that: "

3. Defendant showing defence on merits to have leave to appear.--(1) The Court shall, upon application by the defendant, give leave to appear and to defend the suit, upon affidavits which disclose such facts as would make it incumbent on the holder to prove consideration, or such other facts as the Court may deem sufficient to support the application. (2) Leave to defend may be given unconditionally or subject to such terms as to payment into Court, giving security, framing and recording issues or otherwise as the Court thinks fit. (3)

6. As is evident from the provisions of Rule 3, leave to appear and defend the suit may be granted to the defendant if upon affidavits such facts are disclosed as would make it incumbent on the holder to prove consideration or on such other facts as the Court may deem sufficient to support the application. Clause (2) in Rule' 3 further indicates that leave to defend may be given 'either unconditionally or subject to such terms as to payment into the Court or giving security, etc., as the Court deems fit. It is, however, pertinent to notice that, when the defendant is required to furnish security, no hard and fast rule as to its terms has been laid down by the said rule. It, therefore, entirely lies in the discretion of the Court to specify terms of the security. Therefore, security may be taken either, in respect of the amount payable by the defendant at the time of filing of the suit or it may even include further interest till the entire claim of the plaintiff is satisfied.

7. The order, dated 5-4-1993, passed by the learned Judge in Chambers, part of which was incorporated in this judgment, indicates that the appellants were required to furnish security for the amount claimed in the suit. In the plaint, the respondent had claimed an amount of Rs.1,19,27,191.57 from the appellants, which evidently included the principal amount as well as interest upto the filing of the suit. No doubt, the respondents had also claimed further interest from the appellants at 4 per cent above the bank rate, but such amount, had not been determined either by the respondent or by the Court. Thereafter, clarification was sought to be obtained by the Nazir, as pointed out earlier, but when the learned Judge in Chambers passed the second order, dated 23-1-1994, impugned in this petition, still such amount remained undetermined. Although, the learned Judge in Chambers, while passing the impugned order, appears to have been impressed by the fact that the object behind requiring security from the defendant for future interest was to ensure satisfaction of the entire claim of the plaintiff in case a decree is ultimately passed against the defendants, and we 'do not disagree with the said line of reasoning adopted by the, learned Judge, but, in our opinion, the amount in respect of which security is required, must be a specified sum. The defendant cannot be burdened with obligation to furnish security in respect of something which had not been clearly specified in the leave granting order.

8. In the result, the appeal is allowed and the order passed by the learned Judge in Chambers is set aside. The appellants would be required to furnish security only in respect of the amount specified in the plaint. There will, however, be no order as to costs. M.B.A./A-189/S Appeal allowed.