1999SCMR2353 (PLP)

AJMAL MIAN, C.J.

This is an appeal with the leave of this Court against the order dated 3-7-1997 of the learned Single Judge of the Lahore High Court in C.O.S. No. 20 of 1994 granting leave to the respondent to defend the suit filed for the recovery of Rs.4,08,53,000 as damages under the Banking Companies (Recovery of Loans) Ordinance, 1979 (hereinafter referred to as the Ordinance). Leave to appeal was granted to consider the question as to, whether the learned Judge in Chamber was justified in granting leave though the application for leave was filed on 5-4-1995 instead of by 31-3-1995 i.e. ten days from the date of publication of notice in the newspapers on 21-3-1995, and whether the learned Judge in Chamber could condone the delay under section 5 of the Limitation Act (hereinafter referred to as the Act without any formal, application under the above provision of the Act.

2. The brief facts are that the appellant filed the above suit for the recovery of Rs.4,08,53,000 as damages on the basis of inter alia the following averment: "

3. That the defendant No. 1, hereinafter referred to defendant bank, on 16-9-1998 filed a suit C.O.S. No. 40 of 1989 entitled "MCB v. Qureshi Salt Spices Industries etc.' against the plaintiffs for the recovery of Rs.12,36,282.08 under Banking Companies (Recovery of Loans) Ordinance, 1979, in the Lahore High Court at Lahore. The basis of the suit was a loan facility of Rs.923,000 allowed by the defendant No. 1 to the plaintiff No. l and the accumulated interest. (4). That while the aforesaid suit was pending, the matter was negotiated between the plaintiffs and the defendants, which culminated in Letter No.GMOF/MISC/380, dated 21st March, 1990 addressed to the plaintiffs by the General Manager of the Circle Office of the defendant Bank, Faisalabad, the defendant No.2. The abovementioned letter said that the suit had been compromised between the parties outside the Court, the terms of which were that the defendant bank shall give a further loan of Rs.1,000,000 (Rupees One Million) to the plaintiffs provided that (1) plaintiffs provide so additional security acceptable to the defendant Bank and that (2) the present suit filed by the defendant Bank for the recovery of dues (C.O.S. No. 40/89) was compromised in the Court and a compromise/consent decree was obtained from the Court in favour of the defendant Bank. (5). That the plaintiffs and the defendant Bank on the basis of the compromise embodied in letter dated 21-1-1990 filed a joint application (C.M. No.97/B/89) to this Honourable Court for passing of a compromise decree. Plaintiff No. 2 and the learned counsel of the defendant Bank also got recorded their statements in this Honourable Court on 9-5-1990. On the basis of the said compromises and pursuant to a joint application/statements this Honourable Court was pleased to pass a judgment and decree for a sum of Rs.12,36,282 on 9-5-1990. (14) That in view of the above narrative it is evident that the defendant Bank was under a legal and contractual obligation to allow a load of Rs.1,000,000 to the plaintiffs as promised by the defendant Bank and consented to by the parties to the aforementioned suit. The said agreement was materialized by the parties, especially the plaintiffs, when a consent decree was passed in the suit i.e. C.O.S. No. 40 of 1989. This was an essential condition of the compromise as would appear from letter dated 21-3-1990. It was because of this stipulation viz granting loan of Rs.1,000,000 that the plaintiffs had compromised the said and put a consent decree passed against the plaintiffs otherwise there was no occasion/attraction for the plaintiffs to agree to a consent decree without contesting the suit. The plaintiffs now feel that the defendant Bank played a fraud on the plaintiffs in inducing them to get consent decree from this Hon'ble Court. The defendant Bank with a mala fide intention has been rejecting security documents furnished by the plaintiffs. "

3. It appears that since the above suit was filed under the Ordinance, the learned Judge in Chamber, acting as the Special Court, by his order dated 14-12-1994 ordered the issuance of summons the defendants through bailiff of the Court, by Registered. Post Acknowledgement Due and by publication in different newspapers. It is the case of the appellant that pursuant to the above order the summons was also published in the daily newspapers, namely, Business Recorder, Nation and Dawn of 21-3-1995, Weekly Kahkashan on 23-3-1995 and Nedai-e-Millat on 25-3-1995. It appears that the respondents filed an application under Order 37, Rule 3, C.P.C. for leave to defend on 5-4-1995. In the above application inter alia the following defence was taken: "That the above titled suit for Damages as even envisaged by the summonses, purported have been instituted, against the defendants under the Banking Companies (Recovery of Loans) Ordinance, 1979 read with Order 37, Rules 1 and 2 of the Code of Civil Procedure, 1908, whereas there are no such provisions contained in the said laws under which the suit for damages can be filed by the plaintiffs. Since the jurisdiction of this Honourable. Court as well as application of recovery of loans Ordinance 1977 and order 37, C.P.C. are not available to the plaintiffs in the present case, as such, this suit is liable to be dismissed."

4. However, it appears that the appellant also filed an application on 5-4-1995 (C.M. No. 43/95) praying therein, that since the respondents had failed to file an application for leave to defend the suit within a period of ten days, a decree may be passed. The learned Judge in Chamber through the order under appeal granted the relief for the following reasons: "

2. Mian Hamid Farooq, learned counsel for the plaintiff has argued that the application for leave to appear and defend the suit is barred by time as the limitation is construed from the date when notice was published in the newspaper. He has relied upon Messrs Ahmad Autos and another v. Allied Bank of Pakistan Limited (PLD 1990 SC 497). There may not be any cavil with the proposition and as held by the Supreme Court that the limitation runs from the date of first notice published in the newspaper. As the suit is one for damages, the delay in filing the application has sufficiently explained by the learned counsel for the defendant No.l. In this view of the matter, while condoning the delay, defendant No.l is granted leave to appeal and defend the suit. Written statement shall be filed within one month with an advance copy to the learned counsel for the plaintiff who may file his replication within the next 15 days." Thereupon, the appellant filed a petition for leave to appeal before this Court, which was granted to consider the above question.

5. In support of the above appeal Mian Hamid Farooq, learned counsel for the appellant has urged as follows: (i) That since under rule 8 of the Banking Companies (Recovery of Loans) Rules, 1980 (hereinafter referred to as the Rules) the publication of summons in a newspaper is a good service, the summons was served on the respondents on 21-3-1995 when the summons was published in daily English newspapers Business Recorder, Nation and Dawn and as the respondents instead of filing the above application for leave to defend by 31-3-1995 filed the same on 5-4-1995, the same was barred by time by five days. The learned Judge in Chamber could not have entertained the above application and could not have granted the leave. (ii) That in any case in the absence of any application under section 5 of the Limitation Act, the learned Judge in Chamber could not have condoned the delay in filing of the above application.

6. On the other hand, Raja Muhammad Akram, learned Senior Advocate Supreme appearing for the respondents, has contended as under: (i) That the period of ten days is to be computed from the date of receipt of summons alongwith copy of the plaint and, therefore, the respondents' application for leave was within time. (ii) That the suit on the face of it could not have been filed under the provisions of the Ordinance for recovery of alleged damages amounting to Rs.4,08,53,000 on account of alleged breach on the part of the respondents by not advancing the loan of Rs.10 lac, (iii) That the suit for recovery of damages cannot be equated with the suit founded on a negotiable instrument or based on a documents maintained by the bankers under the Banker's Books Evidence Act, 1891.

7. In support of the above first submission Mian Hamid Farooq has referred to the judgment of this Court in the case of Messrs Ahmad Autos and another v. Allied Bank of Pakistan Limited (PLD 1990 SC 497), in which this Court while construing Rule 8 of the rules has held as follows: ".9..................................................................................... The underlined object of Rule 8 is to avoid the delay in the service of the summons and, therefore, it has been provided that the summons are to be issued simultaneously in three different modes referred to hereinabove, which is the requirement of the above rule. Obviously for the reason that if the summons is not served through a bailiff or by a registered post acknowledgement due, it would be served in any case by publication. In other words, the service is to be- held good if a defendant is served by any of the above three modes of service provided for in Rule 8. ..................................................................................... ..................................................................................... (10) However, we may observe that it appears that neither the Courts below nor the learned Advocate Supreme Court appearing for the petitioners and the respondent/caveator have taken notice of the above amendment as .it has not been referred to in the judgments nor it was referred before us during the arguments. However, we may point out that there was no need to amend the above Rule 8 as the correct legal position was that the service was to be held to be good service if it was effected by any one or more modes of service provided for in the abovequoted Rule

8. If we were to take a contrary view, it would be in conflict with the object of the Ordinance and the Rules framed thereunder, as it would make the service more difficult. It would instead of suppressing the mischief which prompted the framing of above Rule 8, would encourage the mischief as a defendant may successfully avoid service by one of the above three modes of service for considerable period by manoeuvring. "

8. Raja Muhammad Akram, learned counsel for the respondents is unable to cite any case of this Court in which a contrary view might have been taken. Mian Hamid Farooq's above contention that the period for the purpose of computing ten days will be the date of first publication of the summons in the newspaper is in terms of the above judgment of this Court seems to be correct.

9. As regards Mian Hamid Farooq's above second contention, namely, that in any case in the absence of any application under section 5 of the Limitation Act, the learned Judge in Chamber could not have condoned the delay in filing of the above application,' it may be observed that he has referred to the cases of Dr. Sher Dil Batra v. Abdul Rehman Wahla (PLD 1983 Lahore 491) and Abdul Rahman and another v. Mukhtar Ahmad and another (1985 CLC 1072). In the first case a learned Single Judge of the Lahore High Court has held that the mere fact the petitioner was served through registered post acknowledgement due on 12-10-1982 in addition to the ordinary personal service on 7-10-1982, would not automatically extend the period of limitation which had already started when the service was personally effected. It has also been held in the above case that by virtue of the High Court amendments dated 15-11-1928, the provisions of section 5 of the Limitation Act were made applicable to an application under rule 3, sub-rule (1) of Order 37, C.P.C., and a similar amendment was also made in section 14 of the Code of Civil Procedure (Amendment) Ordinance, 1980, and therefore, the jurisdiction under section 5 of the Limitation Act to extend the time is dependent upon filing of an application for the condonation of delay. In the second case it has been held by a learned Single Judge of the Lahore High Court that the delay under section 5 of the Limitation Act cannot be condoned without application. The above position seems to be correct as the delay of each day is to be explained before a Court can condone the delay, and therefore, the same cannot be done unless an application stating sufficient reason for condonation is made.

10. We would have allowed the above appeal on the above two grounds, but we find that it will cause miscarriage of justice instead of advancing the cause of justice. The jurisdiction is vested in the Courts to dispense justice and not to perpetuate injustice. In the present case the appellant has claimed a sum of Rs.4,08,53,000 on account of alleged breach on the part of the respondents not to advance a loan of Rs.ten lac, which amount the appellant intended to recover through the summary procedure provided under Order 37 Rules 1 and 2, C.P.C. for which he sought a decree without trial by filing the aforesaid Civil Miscellaneous Application No.8-B of 1995 under Order 37 Rule 2, C.P.C. read with section 151, C.P.C. That the Special Court has jurisdiction in respect of a claim filed by a banking company against a borrower or by a borrower against a banking company in respect of or arising out of a loan by virtue of clause (1) of section 6 of the Ordinance.

11. We would not like to express our view on the question as to, whether the appellant's claim for damages for the above sum of Rs.4,08,53,000 can be said to have arisen out of a loan. However, we would observe that the above question needs examination. The learned Judge in Chamber acting as Special Court could not have passed a decree straightaway as the present claim for damages cannot be equated with a suit founded on a negotiable instrument. In this behalf reference may be made to the case of Haji Ali Khan & Company, Abbottabad and 8 others v. M/s, Allied Bank of Pakistan Limited, Abbottabad (PLD 1995 SC 362) relied upon by Raja Muhammad Akram, learned Senior Advocate Supreme Court for the respondents, wherein while construing Rules 3 and 4, Order 37, C.P.C. this Court held as under:

"(10)The ratio decidendi of the abovereferred cases seems to be that if a defendant fails to appear or fails to obtain leave to defend in response to a summons served in Form No.4 provided in Appendix B to the C.P.C. or fails to fulfil the condition on which leave was granted where the Court refuses to grant leave, the Court is to pass a decree. It may further be observed that in sub-rule (2) of Rule 2, C.P.C., it has been provided that if a defendant fails to appear or defaults in obtaining leave, the allegations in the plaint shall be deemed to be admitted and the plaintiff shall be entitled to a decree, but no such consequences are provided for in Rule 3 of the above Order in a case where the Court refuses to grant leave or the defendant fails to fulfil the condition on which leave was granted. In our view, notwithstanding the above omission in Rule 3, the effect of refusal of the Court to grant leave or failure on the part of the defendant to comply with the condition of the leave, will be the same i.e. the defendant shall not be entitled to defend the suit on any ground and the Court would pass a decree in favour of the plaintiff. However, this does not necessarily mean that the Court is not required to apply its mind to the facts and the documents before it. Every Court is required to apply its mind before passing any order or judgment notwithstanding the factum that no person has appeared before it to oppose such an order or that the person who wanted to oppose was not allowed to oppose because he failed to fulfil the requirements of law."

12. If we were to set aside the above order of the learned Judge in Chamber on the above two grounds urged by the learned counsel for the appellant, in our view, it would, perpetuate injustice as the appellant might get a decree for the above huge sum of Rs.4,08,53,000 without proving the quantum of damages allegedly suffered by them on account of failure on the part of respondents to advance a loan of Rs. Ten lac. We are, therefore, of the view that in the above case leave should not have been granted. We, therefore, recall the leave granting order as was done by this Court in the following cases:

(i) Mst. Zubaida A. Sattar and others v. Karachi Building Control Authority and others (1999 SCMR 243); (ii) Muhammad Baran and others v. Member (Settlement and Rehabilitation). Board of Revenue, Punjab and others (PLD 1991 SC 691).

13. In consequence of recalling of the above leave granting order the petition/appeal. stands dismissed. M.B.A./Q-10/S Order accordingly