1991 PLP 1754 (CLC)

SPED HAIDER ALI PIRZADA, J.

This appeal under Section 12 of the Banking Companies (Recovery of Loans) Ordinance, 1979 has been filed against the .judgment and decree dated 12-12-1985 passed by the Presiding Officer, Special Court (Banking) for Sindh at Karachi. The facts leading to the filing of the above appeal are that the appellant filed a suit against the respondents for recovery of an amount of Rs.5,72,724.47 under Order XXXVII of the Code of Civil Procedure. The case of the, appellant, as set out in the plaint, was that at all material times the respondent No.1 had and still has an account No. 561 with the Rampart Road Branch of the Commerce Bank Limited. After nationalization of Banks in Pakistan with effect from 1-1-1974, the said Commerce Bank Ltd. was merged with assets and liabilities with United Bank Limited with effect from 1-1-1975 and as a result the aforesaid account stood transferred to and is now with the appellant-Bank. At the request of the respondents, the said Commerce Bank Limited granted over draft/credit/loan facilities to the respondent in their aforesaid account. In consideration of the grant of the overdraft/loan/credit facilities and as an acknowledgment of liability and security for repayment thereof, the respondents inter alia executed and delivered to the said Commerce Bank Limited a Demand Promissory Note for Rs.10,00,000 (Rupees ten lacs only), Letter of continuity, D.P. delivery letter, letter to charge interest, agreement for cash credit, agreement for pledge of securities and security delivery letter, all dated 3-7-1973. The respondents also, for consideration of the grant of the overdraft/loan/credit facilities and as acknowledgment of liability and security for repayment thereof, executed and delivered to the said Commerce Bank Limited a Demand Promissory Note for Rs.10,00,000, D.P. Note Letter, letter of continuity and authority to charge interest, all dated 30-12-1974. The respondents also executed and delivered to the appellant balance confirmation slips dated 30-12-1974 for the sum of Rs.8,69,280.61. The respondent No.2 executed and delivered to the appellant a continuing guarantee dated 7-8-1973 guaranteeing repayment of overdraft/credit/loan facilities extended to the respondent No.1. The respondents availed of the credit facilities extended by the Commercial Bank Limited and continued by the appellant but neglected and failed to make repayment with the result that as on 30-3-1982 a sum of Rs.5,72,724.47 was outstanding due and payable by the respondents to the appellant after crediting to the respondents' account the proceeds of pledged fixed deposit receipts and interest earned thereon. On 18-9-1980 the appellant issued a notice under section 4(2) of the Banking Companies (Recovery of Loans) Ordinance, 1979 (hereinafter referred to as the `Ordinance' to the respondent and the said notice was duly served on the respondents. The respondents also admitted their liabilities to pay the outstanding amount due and payable to the appellant towards their liability as reflected in the statement of accounts. The respondents in response to the notice under section 4(2) of the Ordinance addressed a letter dated 18-4-1981 to the appellant for sympathetic consideration and for waiver of the loan and interest due to financial difficulties of the respondent No.1. The appellant filed the above suit for recovery of Rs.5,72,724.47, together with interest thereon at 14% per annum from 1-4-1982 till decree and further interest at the same rate until realization of the decretal amount. On receipt of summonses, the respondents moved applications under Order XXXVII, Rule 3 of the Code of Civil Procedure for leave to appear and defend the suit. The learned Presiding Officer held that the suit was barred by time. In that view of the matter, he dismissed the suit and did not decide the applications filed by the respondents. Aggrieved by the above order and decree, the appellant has filed this first appeal. Mr.A .S. Pinger, learned counsel for the appellant has contended that the suit was within time. He has submitted that the learned Presiding Officer has misconstrued the provisions of section 4(2) of the Ordinance. In support of his contention, reliance is placed on a decision of this Court in the case of Allied Bank of Pakistan Limited v. International Commercial Agency and others reported in 1988 M L D at page 2285. Mr. Abdul Razak has submitted that the suit was filed within time and he has no objection for remand. This contention was considered in the above-cited case wherein my brother Nasir Aslam Zahid, J., after giving cogent reasons which are fully supported by the various authorities discussed by him in the said judgment, came to the conclusion as under:

"Once a notice is given by the creditor-bank under subsection (3) of section 4 to a borrower, a loan which might have become time-barred on or after 1-1-1974 has to be sufficiently secured by the borrower. Now, unless the loan is lawfully due i.e. the borrower is liable under the law to repay the loan, he cannot be required by law to secure such loan. But subsection (3) of section 4 requires even such' loan to be secured. By this provision, therefore, it logically follows that the legislature expressly revived the liability to repay such loan in case such loan had become time-barred on or after 1-1-1974 under the law of limitation by making it lawfully due. Once the law revives the liability to repay such time-barred bank loan by making it lawfully due and outstanding, the creditor-bank acquires the right to file a suit for recovery of such lawfully due or lawfully outstanding loan. In case of a bank loan outstanding on the commencing day i.e. 1-4-1979, which was or becomes unsecured or insufficiently secured and which loan had become time-barred on or after 1-1-1974, the liability of the borrower to repay such loan revives on notice being issued to the borrower by the creditor-bank in terms of subsection (3) of section 4 of the 1979 Ordinance as by giving such notice the loan becomes lawfully due. The bank loan thus becomes lawfully due, the creditor-bank acquires all such rights, including the right to file a suit for the recovery of such loan in a competent Court, as the creditor-bank possesses in case of any other lawfully due or lawfully outstanding loan. Subsection (4) of section 4 of the 1979 Ordinance gives an additional right to the creditor-bank to move the special Court by an application for attachment of so much of the property of the borrower as is mentioned in this subsection in case the borrower does not comply with the notice issued to him under subsection (3) of section

4. In my view, subsection (4) of section 4 does not deprive the creditor-bank of the rights that accrued to it on the revival of the liability of the borrower to repay the outstanding bank loan by virtue of subsection (3) of section 4." Mr. Ally Madad Shah, J., did not agree with the conclusion arrived at by Mr. Nasir Aslam Zahid, J. As a result of difference of opinion, the matter was referred to Mr. Saeed Uzzaman Siddiqui, J. My brother Saeed Uzzaman Siddiqui, J agreed with the conclusion of Nasir Aslam Zahid, J. We are in respectful agreement with the view expressed in the said decision. We see no reason to take a different view. First Appeal No.7 of 1986 is allowed, the impugned order and decree of the Special Court dismissing the suit on the ground of limitation, is set aside. The suit is remanded to the Special Court. The Special Court is directed to decide the applications under Order XXXVI, Rule 3, C.P.C. as well as the suit in accordance with law within six months from receipt of the judgment and R&P of the case. In the circumstances of the case, the parties are directed to bear their own costs. U-108/K Case remanded.