1990 PLP 686 (SCMR)

"Rule 3 of Order XXXVII, C.P.C. empowers the Court to give unconditional leave or subject to such terms inter alia, as to the payment into Court or giving security as it thinks fit. The scope of this provision of law has been examined and explained in a number of judgments of the superior Courts. Since the facts of different cases seldom coincide, so, no specific rule has been laid down for determining the question as to how discretion vested in the Court with regard to the imposition of conditions, be exercised. This question wholly depends upon the facts and circumstances of each case." The learned Judge then went to observe‑‑ "Having reviewed the application for leave to defend, supporting affidavit, plaint and the reply to the application for leave to defend and the documents annexed therewith and considering the distinction between governing principles, for grant of conditional or unconditional leave, I have not been able to persuade myself to agree with the learned counsel for the Bank, for the reasons that the firm's allegations of unilateral imposition of pledge condition by the Bank, forced cash payment, breach of promise to release the goods on payment of cash, deceitful retention of goods which were to be delivered to the consumers after cash payment by the Bank and of violation of the settled terms although enough securities in the form of legal and equitable mortgage, insurance and personal guarantee had been provided by the firm to cover and secure the financing facilities provided by the Bank and of causing heavy financial loss, destruction and humiliation, against the Bank, neither appear to be baseless nor are based on vague or frivolous averments and that the defence taken in the application for leave to appeal, appears to be controvertible." Dealing with the contention of the learned counsel that the Bank should be allowed to defend the suit unconditionally, the learned Judge observed:‑ "The contention of the learned counsel that since the defendant is a Bank with a very high liquidity and position, therefore, imposition of condition while granting leave to appeal is uncalled for, is devoid of force and substance as it is the quality of the defence and not the status of the defendant which should be the governing factor." The learned Judge further went on to observe:‑ "It would be in consonance with the rule of law and administration of justice that in the matter of imposition of condition, there should be no discrimination between a Banking Company and a borrower. In a suit for money filed by borrower against the Bank, the latter does not deserve special or preferential treatment by the Court. The relevant law does not prohibit the imposition of conditions on a particular Bank. The Banking Company does not enjoy statutory privilege and protection in the matter of grant of leave to defend or imposition of conditions thereto. There will be no difficulty for the Bank to fulfil the condition which may be imposed and thus imposition of condition will not render the grant of leave illusory." The ultimate conclusion was expressed thus:‑ "I grant leave to appear and defend the suit subject to the defendant's depositing Rupees one crore i.e. 1/21 of the suit money in the Court and furnishing guarantee by other bank of its choice, to the tune of Rupees 10 crore on or before 4‑1‑1989." Mr. S.M.Zafar, learned counsel for the petitioner‑Bank, has submitted that the fact whether the learned Special Court had the jurisdiction to entertain the plaint filed by respondent No.1 was itself doubtful inasmuch as the suit of respondent No.1 being primarily one of damages based on the alleged conduct of the petitioner‑Bank was not a suit in respect of, or arising out of a loan which alone leaves jurisdiction to the Special Court to entertain and take cognizance of the plaint. In. these circumstances, the interim order directing the petitioner‑Bank to deposit a sum of Rs. one Crore in the Court and furnish a bank guarantee by anther bank of its choice to the tune of Rs.10 Crores was unjustified. He further submits that the learned Judge, after coming to the conclusion that "the leave application discloses facts as would make it incumbent upon the firm (respondent No.1) to prove its claim and rebut the facts stated in the application" should have induced the learned Judge to grant unconditional leave to defend. Furthermore, the conditions imposed in the impugned order were oppressive and that the learned Special Court had exercised its jurisdiction, if indeed he had any jurisdiction in the matter, arbitrarily and adversely. Raja Muhammad Akram, learned counsel for the respondent Firm has, in reply, drawn our attention to several judgments of this Court wherein it has been held that the imposition of conditions while granting leave to defend is within the discretion of the trial Court and such discretion should not, as a general rule, be interfered with. We agree with the learned counsel for the respondent that the conditions imposed while granting leave to defend are within the discretion of the trial Court but it has also consistently been held that this Court can examine the question whether the discretion exercised in this behalf has been exercised legally, reasonably, fairly and not oppressively, capriciously or perversely. 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.l 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 riled 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. Leave accordingly is granted. The condition imposed in the impugned order while granting leave to defend namely that the defendant (Banking Company) should deposit Rupees one crore in the Court and furnish guarantee to the tune of Rupees 10 Crores by another Bank of his choice is modified to the extent that the defendant (the petitioner herein) is allowed leave to defend the suit o in one condition namely on depositing Rupees 50 lacs within one month from today i.e. by 2‑3‑1989. The Special Court may also give priority to the disposal of this suit and may dispose it of within a period of three months, if possible. The appeal shall he made ready on the present record with liberty to the parties to add further documents, if any. Security for costs shall be furnished in the sum of Rs.10,

000. M.A.K./H‑81/S Leave granted.