2007 PLP 501 (CLD)

IQBAL HAMEED-UR-REHMAN, J.

The appellants have preferred the instant appeal to challenge the judgment and decree dated 24-2-2004, whereby the learned Banking Judge of this Court rejected the plaint in appellant's suit for declaration and recovery of Rs.8,43,51,726 with mandatory injunction (C.O.S. No.1 of 2001).

2. The appellants, on 3-1-2000, filed the suit for declaration and recovery of Rs.8,43,51,726 with mandatory injunction (C.O.S. No.1 of 2001), against the respondents, under the provisions of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act 1997 (Act, 1997), before this court, under the original banking jurisdiction. The respondents, when served, filed the application under sections 9(4) and 10 of the Act, 1997 (C.M. No.109-C of 2000), oh 2-2-2000, seeking leave to defend the suit. Before the said application could be decided, Act 1997 was repealed and Financial Institutions (Recovery of Finances) Ordinance, 2001 (Ordinance, 2001) was promulgated. The respondents, after the enforcement of Ordinance, 2001 did not file the amended application for leave to defend the suit, as required under section 10(12) of the Ordinance, 2001. The learned Banking Judge of this court heard the learned counsel of the parties on the leave application (C.M. No.109-C of 2000) and after repelling appellant's objection, qua non-compliance of the provisions of section 10(12) of the Ordinance, 2001, held that the earlier application meets the requirement of section 10 of the Ordinance, 2001 and the appellants, being the plaintiffs, cannot succeed in the suit without producing evidence, and proceeded to allow respondent's leave application and called upon the respondents to file written statement, vide order dated 18-12-2003. The respondents, on 15-1-2004, filed the application under Order VII, rule 11, C.P.C. (C.M. No.104-C of 2004) for rejection of the plaint on the ground that the appellant No.1, being unregistered firm, is debarred from filing the suit in view of section 69 of the Partnership Act, 1932. The respondents also filed the written statement on 16-1-2004. The appellants contested the said application through its reply. Ultimately, the learned Banking Judge of this court, after hearing the parties accepted the said application and rejected the plaint in appellant's suit, on the ground that their suit is barred by section 69(2) of the Partnership Act, vide impugned judgment and decree dated 24-2-2004, hence the present appeal.

3. The learned counsel for the appellants has contended that after the promulgation of Ordinance, 2001, the defendants did not file the amended leave application, as required under section 10(12) of the Ordinance, 2001, thus they failed to comply with the said provision, therefore, the learned Banking Judge was bound to dismiss respondent's leave application and the suit of the appellant deserved to be decreed forthwith. He has relied upon Saudi Pak Industrial and Agricultural Investment Company (Pvt.) Limited, Islamabad v. Mohib Textile Mills Limited Lahore and 3 others 2002 CLD 1170. Secondly, it is urged that the learned Judge has fallen in error while rejecting the plaint in view of section 69(2) of the Partnership Act. It has been next contended that as. per section 4 of the Ordinance, 2001, the provisions of this Ordinance shall have the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force, hence section 69(2) of the Act, 1932 is not applicable in the instant case. He has summed up by submitting that the impugned judgment and decree be set aside and the case be remanded to the learned Judge Banking Court for its decision on merits. Conversely, the learned counsel for the respondents while refuting the aforesaid contentions has supported the impugned judgment, and decree and prays for the dismissal of the appeal. He has relied upon Usman v. Haji Omer Haji Ayub and Haji Razzaq PLD 1966 SC 328.

4. We have heard the learned counsel and examined the available record. Order dated 18-12-2003 passed by the learned Banking Judge, in the presence of the learned counsel for the parties, is a complete answer to the first contention raised by the learned counsel. For ready reference said order is reproduced below:-- "This is suit filed by the plaintiffs seeking damages against the defendant-Bank and two other defendants. Learned counsel states that although defendants have submitted an application seeking leave to appear under the previous law but they have not filed an application to seek such leave under section 10(12) of the Financial Institutions (Recovery of Finances) Ordinance, 2001. The application under the earlier statute meets the requirements of section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. In any event, the plaintiffs cannot succeed in the case without producing evidence that they are entitled to the damages claimed by them. In this view of the matter, the earlier application being compliant with section 10(12) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 is allowed. The defendants are allowed to file written statement within a fortnight. Let the matter be listed for framing of issues on 20-1-2004." The learned Judge dealt with and decided the objection raised by the learned counsel for the appellant and after finding that the application filed under the earlier statute meets the requirement of section 10 of the Ordinance, 2001, allowed respondent's earlier application. It may be noted that the appellants did not challenge the said order at an appropriate stage. Additionally, the learned Banking Judge has rightly held that since the appellants filed the suit for damages, therefore, in order to succeed in the case, they will have to produce the evidence. Even if the respondent-Bank failed to file any application for leave to defend the suit, the learned Banking Judge was legally obliged to decide the suit for damages after recording plaintiffs evidence in support of his claim, thereby providing adequate opportunity to the respondent-Bank to cross-examine the witnesses. In such-like case, even if the defendant does not appear before the learned Banking Court or he is not granted leave, the Banking Court is not absolved of its duty to apply its mind to the facts and circumstances of each case. Honourable Supreme Court- of Pakistan in the case reported as Messrs Qureshi Salt and Spices Industries, Khushab and another v. Muslim Commercial Bank Limited, Karachi through President and 3 others 1999 SCMR 2353 has held as under:-- "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. Messrs 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 XXXVII, C.P.C. this Court held as under:-- "(10) The ratio decidendi of the above referred 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."

5. Now coming to the second contention raised by the learned counsel, as noted above. The learned Judge Banking Court allowed respondent's leave application on 18-12-2003, they filed the application for rejection of plaint on 15-1-2004 and written statement on 16-1-2004. Section 7(1) of the Ordinance, 2001 provides that a Banking Court shall, in exercise of its civil jurisdiction, have all the powers vested in a Civil Court under the Code of Civil Procedure, therefore, it cannot be argued that the learned Banking Judge is divested of his jurisdiction to exercise the powers under Order VII, rule 11, C.P.C. It appears appropriate to reproduce a portion from the judgment reported as Messrs Waheed Corporation through Proprietor and another v. Allied Bank of Pakistan through Manager 2003 CLD 245:-- "Undoubtedly after the grant of leave to defend and treating the leave a 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." (Underlining is ours).

6. Now reverting to the last contentions of the learned counsel, the same is equally devoid of any force. It has been held in Hudaybia Textile Mills Ltd. and others v. Allied Bank of Pakistan Ltd. and others PLD 1987 SC 512 that wherever the provisions of Ordinance are repugnant to the provisions of the C.P.C., the former will override the latter. In this context it appears appropriate to reproduce a portion of the judgment, which reads as follows:-- "Reading sections 4(1) and 141, C.P.C. together the position that emerges clearly, is that while exercising its civil jurisdiction the special Court has to follow the procedure laid down in regard to the suits in the C.P.C. except to the extent any contrary provision is made in the special enactment. Therefore, wherever the provisions of the Ordinance are repugnant to the provisions of the C.P.C., the former will override the latter. To that extent the general provisions of the C.P.C. will give way to the contrary provisions of the Ordinance which will take over to the extent of the repugnancy."

7. We have also examined the provisions of Ordinance, 2001 in juxtaposition with section 69(2) of the Partnership Act, 1932 and find that the latter provision of law is 'not repugnant to the provisions of Ordinance, 2001. Additionally, the said Ordinance does not provide for the exclusion of the provisions of Partnership Act. It can neither be urged nor held as canvassed by the learned counsel, of course unsuccessfully, that the provisions of Partnership Act cannot be made applicable to the cases tried and adjudicated under the Ordinance, 2001.

8. In the above perspective, we, have examined the impugned judgment and find that the learned Judge Banking Court rightly rejected the plaint in appellant's suit, in view of the provisions of section 69(2) of the Partnership Act, and committed no legal error in exercising the powers under Order VII, rule 11, C..P.C, The impugned judgment and decree do not suffer from any illegality, thus we are not persuaded to unsettle the same.

9. In view of the above, the present appeal is devoid of merits, hence stands dismissed with no order as to costs. The appeal is finally disposed of. H.B.T./M-46/L Appeal dismissed.