2005 PLP 653 (CLD)

Mian hamid Farooq, j.

Appellants/plaintiffs, through the filing of the present first appeal, under section 21 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, has called in question judgment dated 28-5-2001, whereby the learned Banking Court rejected the plaint in the appellant's suit for declaration and permanent injunction.

2. Facts leading to the filing of the present appeal are that the appellants filed the suit for declaration and permanent injunction, against the respondents, before the learned Banking Court, at Lahore. Upon presentation of the plaint, the learned Banking Court issued pre-admission notices to the respondents by registered post acknowledgement due and by telegram. Pursuant to the notices issued to the respondents, the respondent-Bank, on 10-5-2001, entered appearance through its learned counsel, but failed to file application seeking leave to defend the suit. Subsequently, the learned Banking Court proceeded to reject the plaint in appellant's suit, in purported exercise of powers under Order VII, rule 11, C.P.C., on the ground that the plaint does not disclose any cause of action, vide impugned judgment dated 28-5-2001, hence the present appeal.

3. Learned counsel for the appellants has contended that the respondents did not file any application seeking leave to defend the suit but the learned Banking Court, instead of decreeing the suit, has erroneously rejected the plaint. He has further submitted that the impugned judgment is liable to set aside in view of the judgments reported as Messrs Waheed Corporation through Proprietor and another v. Allied Bank of Pakistan through Manager 2003 CLD 245 and Sheikh Muhammad Kashif v. Askari Leasing Limited through Manager/Chief Executive of Branch/ Recovery Officer 2004 CLD 1645.

4. Notices were sent to the respondents for today and the presumption is that the same have been served upon the respondents. Despite that none has entered appearance to defend this appeal, hence they are proceeded ex parte.

5. In view of the arguments of the learned counsel, we have examined the summoned record and find that on 20-4-2001, when the plaint was presented to the Banking Court, it issued pre-admission notices to the respondents for 10-5-2001, through registered post and by telegram and the respondents were directed to file the latest statement of accounts. On 10-5-2001, the respondent- Bank, instead of filing the application seeking leave to defend the suit, as required under section 10 of Act XV of 97, appeared before the learned Banking Court through its learned counsel and showed its inclination to contest the suit. On the subsequent date, the appellants were directed to deposit a sum of Rs.20,000 and to produce the receipt whereof before the Court and on the succeeding date the plaint was rejected. It appears appropriate to reproduce the different orders passed by the learned Banking Court, which read as follows:--

6. Section 9 of Act XV of 1997 inter alia envisages that a barrower or a customer or Banking Company may institute a suit in the Banking Court by presenting a plaint and thereupon the defendants be served through Bailiff, by registered acknowledgement due, by courier and by publication in the newspapers. Section 9(4) of the said Act provides that if a defendant, after the service of summons, does not obtain leave from the Banking Court, he shall not be entitled to defend the suit and in default of doing so the allegations of fact in the plaint shall be deemed to be admitted and the Banking Court may pass a decree in favour of the plaintiff.

7. Placing the afore-narrated facts in juxtaposition with the provisions of section 9 of Act XV of 97, it is evident that the learned Banking Court did not adopt the procedure, as prescribed in the said statute and has, in fact, gone outside the scope of section 9(4) of Act XV of

97. Admittedly, the respondent-Bank did not file any application, seeking leave to defend the suit and the learned Banking Court, instead of proceeding against the respondent-Bank, for not filing the leave application, has penalized the appellants by rejecting their plaint. We are of the view that the approach of the learned Banking Court in rejecting the plaint is perfunctory and casual. As noted above, section 9(4) specifically provides that a defendant shall not be entitled to defend the suit, unless he obtains leave from the Banking Court. In the instant case, the learned Banking Court, instead of giving premium to the appellants for the neglect of the bank, for not filing leave application, rejected the plaint in complete oblivion of the facts of the case and law on the subject. The learned Banking Court has completely bypassed the procedure of Banking Courts, as provided under section 9 of Act XV of 97 and has evolved its own procedure. It is pertinent to mention here that the Banking Courts, which are the creature of the statute, are bound by the provisions and procedure provided under that statute. The learned Banking Court on the one hand proceeded in violation of the procedure provided under section 9 of the Act XV of 97 and on the other hand rejected the plaint.

8. There is another aspect of the case. It appears from the record that on 28-5-2001, the suit was not fixed for hearing, as contemplated under the law and the matter regarding the deposit of Rs.20,000 and the production of receipts thereto was fixed before the Court. As the suit was not fixed for hearing on 28-5-2001, therefore, the plaint could not have been rejected, as erroneously done in the present case. On this count too, the impugned judgment cannot be sustained.

9. From the above, it may not be construed that a learned Banking Court is completely divested from exercising the powers under Order VII, rule 11, C.P.C., however, the same cannot be exercised before deciding the application for leave to defend the suit. It has been held in the cases of Messrs Waheed Corporation through proprietor and another and Sheikh Muhammad Kashif (ibid) relied upon the learned counsel that:-- Undoubtedly after the grant of leave to defend and treating the leave application as written statement, the respondents are within their right to have filed an application under Order VII, rule 11, C.P.C. and if the Court reaches the conclusion that the case falls under any of the clauses of Order VII, rule 11, C.P.C., of course, plaint could have been rejected, but in no way before the grant of leave to defend the suit.

10. In the above perspective, we have examined the impugned judgment and find that the same is contrary to the provision of Act XV of 97, thus, we are inclined to interfere in the impugned judgment and set the same aside.

11. Upshot of the above discussion is that the present appeal is allowed and the impugned judgment dated 28-5-2001 is set aside. Result would be that the suit, filed by the appellants titled Manzoor Hussain etc. v. Agriculture Development Bank of Pakistan, etc. shall be deemed to be pending before the learned Banking Court, which shall decide the same after hearing the parties and of course in accordance with law. M.B.A./M-860/L Appeal allowed.