1991 PLP 75 (SCMR)

AJMAL MIAN, J.‑‑‑By this common order, we intend to dispose of the above two petitions as they involve common point of law though are directed against two different orders passed by a learned Single Judge of the Lahore High Court, Rawalpindi Bench, Rawalpindi, in the capacity of Banking Court under the Banking Companies (Recovery of Loans) Ordinance, 1979, hereinafter referred to as the Ordinance.

2. The brief facts of the above first petition are that the respondent filed a suit for recovery of Rs.17,95,346/65 under the Ordinance against the petitioner in respect of the financial facilities availed of by them. Upon service of the summon of the suit, the petitioner filed an application under Order 37 Rule 3, C.P.C. read with Section 7(2) of the Ordinance for leave to appear and to defend the suit on the grounds mentioned therein. The learned Banking Court granted conditional leave and ordered the furnishing of 4ecurity for a sum. of Rs.6,00,000 being the approximate balance amount after adjusting Rs.14,00,000 as the approximate assessed value of the mortgaged property on the basis that at the time of the creation of mortgage in 1980, the mortgaged property was assessed at Rs.7,00,000 and the same was treated by the learned Banking Court as Rs.14,00,000 because of the passage of time. Whereas the facts to be noted in the above second petition are that the respondent filed a suit for the recovery of Rs.39,38,706 under the Ordinance against the petitioners in respect of the financial facilities availed of by them. Upon service of the summon of the suit, the petitioners filed an application under Order 37 Rule 3, C.P.C. read with Section 7(2) of the Ordinance for leave to appear and to defend the suit on the grounds mentioned therein. The learned Banking Court granted conditional leave and ordered the furnishing of security for a sum of Rs.20,00,000 being the approximate balance amount after adjusting Rs.20,00,000 as the approximate assessed value of the mortgaged property on the basis that at the time of the creation of mortgage in 1981, the mortgaged property was assessed at Rs.10,00,000 and the same was treated by the learned Banking Court as Rs.20,00,000 because of the passage of time. The petitioners, being aggrieved by the above conditional orders, have filed the above petitions for leave.

3. In support of the above petitions, Kh. Muhammad Farooq, learned A.S.C. appearing for the petitioners, has vehemently contended that the learned Banking Court after having concluded that the petitioners had raised triable defence, was bound to grant unconditional leave. His further submission was that in any case the mortgaged property has been grossly undervalued by the learned Banking Court .in both the above petitions. In furtherance of his above first submission, he relied upon the case of Fine Textile Mills Ltd. Karachi v. Haji Umar P L D 1963 S C 163, the case of Abdul Karim Jaffarani v. United Bank Limited and 2 others 1984 S C M R 568 and the case of Habib Bank Limited, Circle Office, Multan v. Al‑Qaim Traders and another 1990 S C M R

686. In the first case which was a suit on two dishonoured cheques, this Court allowed the appeal against the judgment of the High Court declining leave to defend subject to the condition that the entire suit amount was to be deposited. While disposing of the above appeal, the following observations were made:‑ "In a suit of this nature where the defendant discloses upon his affidavits facts which may constitute a plausible defence or even show that there is some substantial question of fact or law which needs to be tried or investigated into, then he is entitled to leave to defend. What is more is that even if the defence set up be vague or unsatisfactory or there be a doubt as to its genuineness, leave should not be refused altogether but the defendant should be put on terms either to furnish security or to deposit the amount claimed in Court:" In the above second case, the respondent bank had filed a suit under Order 37, C.P.C. for the recovery of Rs.22,59,483/97, leave to defend was granted on the condition to furnish security of the suit amount by a learned Single Judge of the Sindh High Court. Upon Intra Court Appeal, the judgment was modified as to the nature of the security without reducing the amount. Against the above judgment, appeal was filed with the leave of this Court which was allowed and the amount was reduced to Rs.2,80,000 on the basis of the averment as to the actual amount which was allegedly due. Whereas in, the third case, this Court granted leave against the order of the Banking Court granting leave to defend the suit on the condition of furnishing of a bank guarantee in the sum of Rs.10,00,

000. The petitioner M/s. Habib Bank Limited filed the aforesaid petition for leave against the above order. The amount of security was reduced to Rupees 50 lacs for the reason recorded in. one of the paras of the order, which reads as follows:‑ "In this case we observe that the petitioner‑Bank is one of the leading Banking Companies in the country possessing a very high liquidity position. Accordingly, there should be no difficulty in execution of any decree passed against it. The main purpose of the Banking Companies (Recovery of Loans) Ordinance is to facilitate the recovery of loans due from any borrower to a Banking Company and vice. versa. In this case, the claim of respondent No.1 is based on certain estimated amounts alleged to be the losses suffered by him and the respondent has still to prove that such losses were indeed suffered and that there is a direct and immediate connection between the loss suffered by him and the loan of the Banking Company. Again, the view expressed by the learned Judge, while imposing the onerous conditions that have been imposed on the Banking Company viz. that it would be in consonance with the rule of law and administration of justice that suits filed by borrowers against the Bank should be treated exactly on the same footing in the matter of imposition of conditions on being granted leave to defend despite their very high liquidity position is a proposition which needs examination."

4. In our view, the facts of the above cases are distinguishable from the facts of the cases in hand inasmuch as the first two cases do not relate to the recoveries under the Ordinance. In the above two cases even the liability to pay any amount was denied, whereas in the third case, a suit for the recovery of damages amounting to Rupees 21 crores was filed by the respondents against the petitioner‑bank. It was pointed out in the above‑quoted portion of the order that the alleged losses‑were still to be proved by the plaintiffs in the suit and that the petitioner‑bank/defendant was one of the leading Banking Companies in the country possessing a very high liquidity position. In the instant case the factum of having received the aforesaid financial facilities has not been denied though certain objections have been raised as to the amount etc. We may observe that it is a matter of discretion with the Banking Court to grant leave conditionally or unconditionally so long as such a discretion is exercised reasonably without being arbitrary or capricious. In the instant case, the learned Banking Court has dilated upon the question and has applied its mind to the facts of the case. There seems to be no justifiable reason to interfere with the discretion exercised by the Banking Court.

5. As to the valuation of the mortgaged property, it will suffice to observe that the petitioners, had not filed any document before the Banking Court to indicate the approximate present value of the mortgaged properties. The Banking Court, therefore, has assessed the value approximately. The above petitions have no merits and, therefore, leave is refused. AA./N‑266/S ????????????????????????????????????????????????????????????????????????????????????????????????? Leave refused.