Leave to defend the suit

Plaintiff / financial institution instead of appending complete statement of accounts appended only statement of balances and certificate of outstanding amount

Validity

Statement of account envisaged in S. 9(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 is a document reflecting debits and credits and dates thereof from the time of disbursement

Any statement only of balances or a certificate of outstanding amount is not such a statement of account

Statement appended to plaint was not certified as required by S. 9(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 as it did not bear the certificate prescribed by S. 2(8) of Bankers' Books Evidence Act, 1891 and could not be taken as prima facie evidence of existence of entries it had reflected

This recognition was otherwise provided to a certified copy by virtue of S. 4 of Bankers' Books Evidence Act, 1891

Print-out of such electronic document for the purposes of S. 9(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 was required to be certified under Bankers' Books Evidence Act, 1891

Omission of statement of account with plaint was a defect that was rectified to avoid rejection of plaint but the same had deprived defendants of a defense on accounts, thereby raising a substantial question of fact for granting leave to defend

Defendants who were directors and officials of defendant company, were entitled to leave to contest, plaintiffs / financial institution's accounts in as much as those were produced for the first time with the replication

Application was allowed.

Appellant/defendant sought cancellation of underlying agreement which was the basis of his suit for cancellation but such plea did not lie in summary suit

High Court declined to interfere in judgment and decree passed by Trial Court as the same was well-reasoned and proof of dishonored cheques was annexed with plaint

Trial Court rightly observed that presumption regarding cheques in question under S. 118 of Negotiable Instruments Act, 1881, was to be admitted

Appeal was dismissed, in circumstances.

In summary suit, when defendant does not obtain leave or leave is refused to him, or where defendant fails to comply with conditional order such defendant is precluded from further contesting plaintiff's claim

There is further disability for defendant under O. XXXVII, C.P.C. that allegations in plaint must be deemed to be admitted and plaintiff would be entitled to a decree

Provisions of O. XXXVII, C.P.C. not only provide for abridgement of procedure of suits so covered but restricts and curtails right of defendants in such suits to contest plaintiff's claim

When matter is carried in appeal, the defendant who did not obtain leave or had failed to comply with conditional order continues to suffer under the same disability.

Appellant/defendant was granted leave to defend the suit subject to deposit of security in shape of Defence Saving Certificates

Appellant/defendant failed to comply the condition resultantly suit was decreed against him

Validity

Cheques in question had presumption under S. 118 of Negotiable Instruments Act, 1881, and contents of plaint and allegations made therein were deemed to be admitted

Appellant/defendant did not comply with conditional order, therefore, he was not entitled to challenge the decree before High Court on such grounds that he had taken in application for leave to defend the suit

High Court declined to interfere with judgment and decree passed by Trial Court as the Court did not err in law by passing a decree

Appeal was dismissed, in circumstances.

In summary suit, when defendant does not obtain leave or leave is refused to him, or where defendant fails to comply with conditional order such defendant is precluded from further contesting plaintiff's claim

There is further disability for defendant under O. XXXVII, C.P.C., that allegations in plaint must be deemed to be admitted and plaintiff would be entitled to a decree

Provisions of O. XXXVII, C.P.C., not only provide for abridgement of procedure of suits so covered but restricts and curtails right of defendants in such suits to contest plaintiff's claim

When matter is carried in appeal, the defendant who did not obtain leave or had failed to comply with conditional order continues to suffer under the same disability.

Appellant/defendant was granted leave to defend the suit subject to deposit of security in shape of Defence Saving Certificates

Appellant/defendant failed to comply the condition resultantly suit was decreed against him

Validity

Cheques in question had presumption under S. 118 of Negotiable Instruments Act, 1881, and contents of plaint and allegations made therein were deemed to be admitted

Appellant/defendant did not comply with conditional order, therefore, he was not entitled to challenge the decree before High Court on such grounds that he had taken in application for leave to defend the suit

High Court declined to interfere with judgment and decree passed by Trial Court as the Court did not err in law by passing a decree

Appeal was dismissed, in circumstances.

Appellant/defendant sought cancellation of underlying agreement which was the basis of his suit for cancellation but such plea did not lie in summary suit

High Court declined to interfere in judgment and decree passed by Trial Court as the same was well-reasoned and proof of dishonored cheques was annexed with plaint

Trial Court rightly observed that presumption regarding cheques in question under S. 118 of Negotiable Instruments Act, 1881, was to be admitted

Appeal was dismissed, in circumstances.

Application for leave to defend the suit filed by appellant/defendant was dismissed due to non-prosecution resultantly Banking Court decreed the suit in favour of respondent/plaintiff

Validity

It was not mandatory for Banking Court to decree the suit in favour of respondent/plaintiff upon default of appellant/defendant due to his absence

Even if appellant/defendant failed to file application for leave to defend or had failed to file it in a timely manner leading to its dismissal unless delay was condoned, it was bounden duty of Banking Court to apply its mind to see if respondent/plaintiff had made out a case for decree of the matter

Appellant/defendant's leave application was dismissed by Banking Court simply on account of non-prosecution without considering whether any substantial question of law or fact had arisen therefrom

Banking Court failed to discharge its duty under the law and had adopted procedure alien to the one envisaged in S. 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001

It was the Banking Court which while considering petition for leave to appear and defend the suit should have considered and rendered its findings as to whether it was timely filed

High Court in appellate jurisdiction declined to determine whether petition for leave to appear and defend the suit was time barred or not, as Banking Court failed to consider petition filed by appellant/defendant

High Court set aside judgment and decree passed by Banking Court as it suffered from legal infirmity and the matter was remanded to Banking Court to decide petition for leave to appear and defend the suit afresh

Appeal was allowed accordingly.

Petitioner/defendant was aggrieved of dismissal of his application for leave to defend the suit as the same was barred by 270 days

Validity

Despite filing application for leave to defend after much delay, no application for condonation of delay was filed and at the same time no plausible or sufficient cause/reason was forwarded for such delay

Order passed by Banking Court was silent about any verbal request made by petitioner/defendant at relevant time for condonation of delay

High Court declined to interfere in the order passed by Banking Court as application for leave to defend the suit was hit by limitation and was rightly dismissed

Constitutional petition was dismissed, in circumstances.

If time was not granted by Banking Court for production of evidence at the instance of the party against whom order was required to be made, then penal provision of O. XVII, R. 3, C.P.C. would not be applied against such party though in default on next date

Banking Court could have adjourned the matter subject to deposit of cost before taking extreme measures of closing the right of evidence

Provision of law, regarding closing of right of evidence, required grater care on the part of the Court, as it would shut out one party to defend itself and virtually it would be at the mercy of other party to do justice between the parties

High Court set aside the order passed by Banking Court and restored the suit and provided one opportunity to appellant/Bank to produce its evidence

Appeal was allowed accordingly.

Plea raised by petitioner/defendant was that when issuance of bank cheque was denied leave would have been granted unconditional

Validity

Imposition of condition or granting unconditional leave was within the discretion of Trial Court

When statute conferred such discretion, exercise of same should not be ordinarily interfered

Discretion was required to be exercised in careful manner and same should be based on logical and legally sustainable reasoning

While granting leave to defend the suit, Trial Court imposed condition mainly on the basis of unilateral statement of respondent/plaintiff without even considering any dispute raised in leave application

Exercise of discretion by Trial Court, conferred under Civil Procedure Code, 1908 was based on some misunderstanding of principles governing exercise of such discretion

High Court set aside leave granting order and remanded the matter to Trial Court for decision afresh

Revision was allowed accordingly.

Plea raised by petitioner/defendant was that when issuance of bank cheque was denied leave would have been granted unconditional

Validity

Imposition of condition or granting unconditional leave was within the discretion of Trial Court

When statute conferred such discretion, exercise of same should not be ordinarily interfered

Discretion was required to be exercised in careful manner and same should be based on logical and legally sustainable reasoning

While granting leave to defend the suit, Trial Court imposed condition mainly on the basis of unilateral statement of respondent/plaintiff without even considering any dispute raised in leave application

Exercise of discretion by Trial Court, conferred under Civil Procedure Code, 1908 was based on some misunderstanding of principles governing exercise of such discretion

High Court set aside leave granting order and remanded the matter to Trial Court for decision afresh

Revision was allowed accordingly.

Application for leave to defend the suit filed by petitioner-defendant was dismissed by Trial Court after consulting record summoned from Bank

Validity

In order to satisfy itself to the contents of leave to appear and defend, the Court was required not to act in a mechanical manner

Trial Court had to apply its judicial mind to the contents of application for leave to appear and defend

Trial Court was not debarred to probe and conduct such inquiry so as to satisfy itself as to the genuineness and plausibility of defence of defendant

Plaintiff in such suit was not debarred to move application for summoning a document in custody of any person which prima facie would establish before Court that defence taken in application for leave to appear in summary suit was sham and illusory

Trial Court rightly summoned record from Bank duly supported by an affidavit to controvert stance of petitioner-defendant

Revision was dismissed in circumstances.

Bank filed suit for recovery of finance and instead of relying upon original contract between the parties, it relied upon collateral contract on the basis of bills of exchange along with shipping documents which were provided by defendants to the Bank

Validity

Bank opted to rely upon collateral contract, therefore, it was pointless for defendants to assert the collateral contract as defence

Except the acknowledged amount, the statement of account required further proof and it could not be received as prima facie evidence within the meaning of S. 4 of Bankers' Books Evidence Act, 1891

Statement of account comprised of transfer entries which did not reveal the accounts wherefrom those originated

Omission by Bank to support its claim or any part thereof by a duly certified statement of accounts was a non-compliance of mandatory provision of S. 9(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Leave to defend the suit was granted in circumstances.

Defendant sought leave to defend the suit on the plea that certification of statement of accounts did not bear name and designation of official who certified the same

Validity

One of the requirements of 'certified copy' of a statement of account was that the certification thereon should be "dated and subscribed by Principal Accountant or Manager of the Bank with his name and official title"

By virtue of S. 4 of Bankers' Books Evidence Act, 1891, such 'certified copy' was prima facie evidence of the existence of entries it reflected

If statement of account of Bank was not a 'certified copy' as per S. 2(8) of Bankers' Books Evidence Act, 1891, then it could not attract a presumption of correctness and Bank was to prove the same as any other document

Leave to defend the suit was allowed in circumstances.

Court under O.XXXVII, R.3, C.P.C. has the discretion to grant leave to defend conditionally or unconditionally which depends upon the facts and circumstances of each case

Purpose of the said Rule is to empower the court to strike a balance between the two situations, i.e. where triable issues are raised/disclosed by the defendant, then unconditional leave to defend is to be granted or where defence is taken by the defendant with the sole object to gain time, then court may insist on some condition.

Purpose of special and separate procedure provided under O.XXXVII, C.P.C. is to ensure speedy and timely disposal of financial matters, which can be brought before a court on the basis of 'bill of exchange', 'promissory note', 'hundi' and 'cheque', etc.

Leave to appear and defend the suit has been made a condition precedent with an obvious object to curb the delaying tactics of a delinquent defendant, who has no plausible defence or a triable issue, and also to minimize the agonies of plaintiff.

Availability or otherwise of pledged stock was a question that could be determined in execution proceedings at the time when collateral security was required to be accounted for and brought to sale; as such the same alone did not furnish a ground of defence to defendants for grant of leave

Bank was not entitled to markup beyond expiry date of finance agreement, however it could recover cost of funds from date of default

Subject to deletion of amount of markup recovered after expiry date of "Running and Cash Finance Facilities", claim of plaintiff Bank was substantiated by agreements, statement of accounts as well as letters written by defendant itself

Defendant failed to raise any substantial question of fact or law requiring recording of evidence for its resolution

Suit was decreed in circumstances.

Defendant was aggrieved of judgment and decree passed by Banking Court after dismissal of his application for leave to defend the suit on the ground of being barred by limitation

Validity

Law had given powers to Court to condone the delay and also to provide a concession to defendant

Object and intention of legislature behind the provision of law was that concession in respect of limitation be provided inasmuch as there was possibility that an aggrieved party might not have knowledge/notice or service through proclamation in newspaper, of proceedings

Provisions of Ss. 9(5) & 10(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, with regard to service of defendant were not to be read disjunctive from the rule of natural justice "audi alteram partem"; which was to be read into every statute, regardless of whether or not the same was contemplated in the statute

Delay in filing of proceedings could not be condoned lightly unless there were shown sufficient reasons causing delay

Law of limitation reduced effect of extinguishment of a right of party when significant lapses occurred and when no sufficient cause of such lapses, delay or time barred action was shown by defaulting party

Opposite party was entitled to a right accrued by such lapses and negligence did not constitute sufficient cause to condone delay

Reason for delay that defendant was not served by any mode prior to the date of knowledge of proceedings stated by defendant and such knowledge in judgment and decree passed by Banking Court was not seriously controverted by plaintiff Bank

Application for condonation of delay, was of merely 2-3 days, within the scope of such provision of law

When delay was duly explained by defaulting party, it was his right to have hearing on merits

High Court set aside judgment and decree passed by Banking Court, as a result petition for leave to appear, filed by defendant, was deemed to be pending

Appeal was allowed accordingly.

Suit filed by plaintiff on the basis of Bank cheque was decreed in his favour as Trial Court declined to grant leave to defend the suit to defendant

Validity

When triable issues were specifically pleaded in leave to defend application by defendant or pleading of plaint in summary suit itself was vague, which required further proof then leave to defend the suit should be granted to defendant

Defendant neither pleaded nature of triable issues nor had come up with any legal justification that the nature of financial transactions between him and plaintiff was such that it lacked consideration for issuance of subject cheque

Defendant also did not plead such facts which had the quality to rebut presumption of consideration as provided by S. 118 of Negotiable Instruments Act, 1881

Trial Court did not fall into any error while passing order/decree, except to the extent of rate of interest which was awarded at the rate of 8% by invoking S. 79 of Negotiable Instruments Act, 1881, instead of 6%

High Court modified decree to the extent of rate of interest only and remaining decree was maintained

Appeal was dismissed accordingly.

Suit filed by plaintiff on the basis of bank cheque was decreed in his favour as Trial Court declined to grant leave to defend the suit to defendant

Validity

Defendant failed to plead any genuine triable issue for which he could be granted leave to defend in the referred summary suit

Defendant failed to comply with specific provisions of O. XXXVII, C.P.C. by not filing leave to defend application within stipulated time

High Court declined to interfere in judgment and decree passed by Trial Court as it had applied its judicial mind and also rightly applied law to the facts of the case

Proceedings under C. P. C. were of summary nature and object of such type of proceedings could not be allowed to be defeated on some fanciful grounds

Appeal was dismissed in circumstances.

Defendant sought leave to defend the suit on the plea that an entry in his statement of accounts was disputed which required recording of evidence

Validity

Disputed entry was explained by plaintiff Bank that defendant deposited a cheque in current account which was sent for clearance and as per I.T. system, the amount was debited to the current account and credited in running finance account

Cheque in question was dishonored accordingly and disputed entry was reversed from running finance account and current account simultaneously

Explanation given by plaintiff Bank was substantiated by statement of current account and running finance account

High Court declined to interfere in the order passed by Banking Court

Appeal was dismissed in circumstances.

Question of loss of pledged goods was not a dispute requiring recording of evidence if liability was otherwise not disputed or a serious and bona fide dispute in regard thereto was not raised by defending customer

If leave to defend was granted to defending customer on account of substantial dispute regarding liability claim of plaintiff Bank, the trial apart from determining the liability of parties would also be held in respect of loss of pledged goods

Defendants failed to raise any ground in their petition for leave to appear regarding liability claim set up by plaintiff Bank under different finance facilities warranting recording of evidence

Dispute regarding alleged loss of goods did not furnish a ground for grant of leave to defend which could be decided in execution proceedings

High Court declined to grant leave to defend the suit

Suit was dismissed in circumstances.

Where defence had raised and disclosed a triable issue or a plausible defence or a prima facie case was made out then leave should be granted as a rule

Court should neither go into the merits of the case to determine if defence was good nor it should go into the truth or falsity of the defence

If plausibility of defence so raised appeared to be determinative then court must exercise its jurisdiction in favour of defendant while providing him opportunity to defend the suit

If court while deciding the application for leave to appear and defend the suit had reached to the conclusion that apparently defence was not bonafide but same required recording of evidence then leave could be granted by imposing equitable condition for due performance of decree

Such condition should not be harsh, unjust and oppressive.

Defendents in their application for leave to defend the suit, did not deny their signatures on financing and security documents and execution thereof

No material was placed on record to establish that they had already repaid amount of finances availed by them and got mortgage of property redeemed or that they were not liable to pay the amount claimed in the suit by bank

No material was available before Banking Court that could create any doubt with regard to the claim of Bank and as such there was no question of recording evidence

Defendants legitimately could not challenge legality, validity and genuineness of documents in view of the provisions of S.20 of Negotiable Instruments Act, 1888

Presumptions were attached to negotiable instruments that the same were made or drawn for consideration etc. in view of the provisions of S.118 of Negotiable Instruments Act, 1881

Defendants failed in raising any substantial question of law or fact, therefore, Banking Court was justified in dismissing their application for leave to defend and suit was rightly decreed in favour of Bank

High Court declined to interfere in judgment and decree passed by Banking Court

Appeal was dismissed in circumstances.

Plea raised by defendant company was that finance facility was secured against facility of hypothecation of stocks and not against pledge and if pledgor could not account for goods, it could not ask for return of money

Validity

Executing Court under S. 47, C.P.C. was fully empowered and competent to decide all questions regarding execution, discharge or satisfaction of decree

All objections by defendant regarding security of pledge could be adjudged at the time of execution of decree by Executing Court

Questions of accounting for and tracing of security of pledged stocks could also take place before Executing Court

Defendant company in its petition for leave to appear and defend the suit had nowhere specifically asserted that plaintiff bank mis-appropriated pledged stocks or that it failed to take care of pledged stocks as were required by it in terms of S. 151 of Contract Act, 1872

Petition for leave to appear and defend the suit was dismissed

Suit was decreed in circumstances.

If court was of the opinion, on consideration of contents of plaint, application of leave to defend of defendant and reply thereto that dispute between parties did not extend to whole claim or that part of the claim was either undisputed or was clearly due, then under S. 11(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001, Banking Court while grating leave with respect to disputed amounts could pass an interim decree in respect to the amount appeared to be payable by defendant

Amount of Rs. 18.2 million was an admitted loan by defendant for which interim decree under S. 11(1) Financial Institutions (Recovery of Finances) Ordinance, 2001, was passed in favour of bank and unconditional leave to defend the suit was granted to defendant to the extent of disputed amount

Application was allowed accordingly.

Banking Court dismissed application for leave to defend the suit and resultantly suit was decreed in favour of plaintiff bank

Defendants contended that blank documents were not signed by them

Validity

Documents were duly signed by defendants and no illegality was pointed out in credit and debit entries as reflected in statement of accounts

By giving blank documents by defendants, an opportunity was provided to fill the same according to bank's choice

Trial Court rightly concluded that defendants failed to make out it case for grant of leave to defend

Defendants failed to point out any misreading or non-reading of evidence in judgment and decree passed by Banking Court

High Court declined to interfere in judgment and decree passed by Banking Court

Appeal was dismissed in circumstances.

Where separate suits are filed against each other by financial institution and customer, applications for leave to defend filed in both suits are to be heard and decided independently on their own merits

Order passed on one application for leave to defend in one suit does not affect or prejudice merits or demerits of application for leave to defend in other suit

In case leave to defend is granted in one suit, even then defendant in other suit does not become entitled for leave to defend the suit as a matter of right.

Defendant is obligated to obtain leave to defend and without obtaining leave, Financial Institutions (Recovery of Finances) Ordinance, 2001, does not permit defaulting defendant to contest claim set up in banking suit.

Some of charged documents were executed on behalf of guarantor by her husband as general attorney but the attorney was not on record

Bank had shown that documents were signed by guarantor in year 1997, including registered mortgage deed for an amount of Rs. 100,000 and another mortgage deed for an amount of Rs.6.155 million, were signed " by guarantor personally and signatures matched

Both the mortgage documents stated that security was tendered to secure disbursement of finance to defendant company

High Court passed interim decree in favour of bank to the extent of Rs.6.155 million and in respect of claim made by the bank for remaining amount of Rs.75.8 million unconditional leave to defend was granted to the guarantor

Decretal amount, under. S.3 of Financial Institutions (Recovery of Finances) Ordinance, 2001, was subject to payment of cost of funds from the date when, guarantor first disputed her liability towards bank in her petition for leave to appear

Petition was allowed accordingly.