Recovery suit

Statement of a witness must be consistent with the circumstances of the case before the same is believed and relied upon.

Application under S. 12(2), C.P.C. did not mention any particulars arguably constituting fraud or misrepresentation which may have been played upon the Banking Court in obtaining judgment and decree from the Banking Court

In absence of any convincing evidence, no misrepresentation or fraud could be alleged to have been contrived by Respondent/Bank to obtain a decision in its favour, which came into being mainly due to the failure of the appellant/customer to put up an appearance before the Banking Court in pursuance of the notices and summons issued to him

Appeal filed by the customer was dismissed, in circumstances.

Contention of the appellant/customer was that a fraud had been played on the Banking Court by not mentioning his correct up-to-date address in the title of the plaint, consequently, no valid service was effected on him

Validity

Service might be effected under S. 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 ('FIO 2001'), by any one of the modes mentioned therein

Record revealed that in the present case service was effected through all modes on the appellant/customer, and he was bound to file his leave to defend application within 30 days from service of summons

Section 9 of the FIO, 2001 stipulated that any one of the modes was a valid service provided such service was effected in the manner prescribed by the Appendix to the Civil Procedure Code, 1908

Appellant/customer did not argue/challenge that service was not affected as provided for in S. 9(5) of the FIO, 2001, in the manner prescribed by the Appendix to the C.P.C., but merely claimed that he did not receive a copy of the summons as the address mentioned in the title of the plaint was incorrect

Appellant/customer did not file leave to defend application and consequently, the Banking Court passed the judgment and decree

Appellant/customer did not prefer any appeal against the said judgment and decree under S. 22 of the FIO, 2001

Appeal filed by the customer was dismissed, in circumstances.

Conduct of the appellant-customer also did not inspire confidence as no valid grounds had been made out to disturb the orders of the Banking Court

No valid grounds had been made out to hear a time-barred appeal

In the present case, the grounds of appeal remained unsubstantiated, general, vague and bald accusations not supported with any cogent prima facie evidence or material, which might require the issuance of notice to the decree-holder/respondent/ Bank or summoning entire record or admit present appeal in whole or in part

Retaining the present appeal on the docket of the Court would only burden the Court, postpone the inevitable writing on the wall and bring misery for the contesting parties, at least for the decree-holder who was prosecuting execution proceedings against the appellant/customer

No illegality or material irregularity was noticed in the impugned judgments, orders and decrees passed by the Banking Court

Appeal filed by the customer was dismissed in limine, in circumstances.

Appellant/customer (defendant/judgment-debtor), during execution proceedings, filed an application under S. 12(2) of the Civil Procedure Code, 1908 ('C.P.C.') in the Banking Court alleging that fraud had been played on the Court

Validity

Record revealed that after about four (4) years of the passing of the judgment and decree by the Banking Court, the appellant (customer/judgment-debtor) filed an Application under S. 12(2) of the Civil Procedure Code, 1908

Under S. 12(2), C.P.C. fraud must be shown by the applicant to have been played upon the Court during the proceedings of the lis

Respondent/Bank sending notices to the last known address of the appellant-customer did not constitute fraud under S. 12(2), C.P.C.

Appeal filed by the customer was dismissed, in circumstances.

Appellate Court/High Court on request of the respondent/Bank while the counsel of appellant/customer was occupied before another bench, directed him (appellant/customer) to deposit decretal amount (without even granting stay or admitting the appeal)

Appellant/customer moved application to recall/review the said order contending that impugned order had been passed in violation of provisions of the S. 22(3) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 ('the Ordinance 2001')

Plea of the respondent/Bank was that the order was rightly passed in view of bar contained in S. 27 of the Ordinance 2001

Validity

Under S. 22(3) of the Ordinance 2001, the Court could consider an order for submitting security at the stage of admitting appeal and a direction for deposit of decretal amount to be issued in the event of grant of stay order, however reasonable order was required to be passed

In the present case, none of said circumstances/pre-conditions existed on the date when the impugned order was passed, or even later than such day/date

Plea of the respondent/Bank was misconceived as the bar contained in S. 27 of the Ordinance 2001 (which was subject to the provision of S. 22 of the Ordinance 2001) would be applicable to Courts and Authorities other than the Banking Courts

"Banking Court" was defined in S. 2(b) of the Ordinance 2001 in which (i) the claim does not exceed Rs. 100 million (as was in the present case); and for the trial of offences under the Ordinance 2001 the Court established under S. 5 of the Ordinance 2001 and (ii) in respect of any other case, the High Court

Whereas, in the present case, High Court as an Appellate Court was exercising jurisdiction when seized of appeal under S. 22 of the Ordinance 2001, and not of a suit under S. 9 of the Ordinance 2001

High Court on the original side also exercises jurisdiction of a Banking Court; which does not mean that the Appellate Court when seized of an appeal becomes a Banking Court

In the present case, neither the present appeal had been admitted nor any stay order had been sought nor passed

Passing of the impugned order due to an incorrect exposition of law regarding S. 22 of the Ordinance 2001 was untenable and unsustainable

High Court recalled the impugned order

Application to review/recall was allowed, in circumstances.

Impugned order of Banking Court, whereby it dismissed application of customer for leave to defend, had been passed in a sketchy manner consisting of only half a page

Further the grounds taken by the customer in his application for leave to defend had not been tackled with sound reasoning

Impugned order had been passed without application of judicial mind and consequently, it was against the law

High Court set-aside the impugned order, and the case was remanded to the Banking Court with the directions that the court shall take into consideration all the material produced by both the parties as well as the grounds taken and arguments raised and then decide the application for leave to defend afresh after proper application of judicial mind, and that before deciding the case the Banking Court shall issue notice to both the parties and will provide an opportunity of final arguments

Appeal was converted into Constitutional petition and allowed accordingly.

Application for leave to defend filed by customer was dismissed by the Banking Court and case was fixed for evidence of the Bank

Customer/appellant filed appeal before the High Court against dismissal of his application

Maintainability

Dismissal of application for leave to defend by the Banking Court and fixing case for evidence of Bank was an interim order

Section 22(6) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 clearly provided that an appeal against such interim order was not maintainable

However, to meet the ends of justice and to thrash out the core issues involved in the matter, the High Court had been bestowed with the powers to convert an appeal into a writ (Constitutional) petition and or treat one kind of proceeding into another

High Court converted the present (non-maintainable) appeal into a writ (constitutional) petition and proceeded into the matter towards the merits of the case.

Where the Banking Court rejected the application for leave to defend or where defendant failed to fulfill the conditions attached to the grant of leave to defend, the Banking Court shall forthwith proceed to pass judgment and decree in favour of the plaintiff and against the defendant

Banking Court while deciding the application for leave to defend or the suit had to take into consideration all the provisions of the Financial Institutions (Recovery of Finances) Ordinance, 2001 ("the Ordinance") as well as material available on record with the proper application of judicial mind

Application of judicial mind was necessary and the Banking Court, while deciding the case, shall keep in mind the requirements of the provisions of the Ordinance including the entries in the statement of account, examine the expiry of finance agreement, finance amount availed, finance amount paid, markup paid, differences etc. including all the other documents tendered by both the parties by virtue of their respective claims

Banking Court shall further keep in mind that markup more than the agreed rate and/or beyond the agreed period could not be granted to the financial institution

Similarly, no other charges or amounts could be allowed to the financial institution to which the customer had not agreed.

When the application for leave to defend was accepted, the Banking Court shall treat the application as a written statement, and in its order granting leave shall frame issues relating to the substantial questions of law or fact, and, subject to fulfillment of any conditions attached to grant of leave, fix a date for recording of evidence thereon and disposal of the suit.

Applicants moved Cooperative Judge for review of his order to hold a separate trial which was dismissed holding that he had no power to review his own order

Validity

Cooperative Judge had rightly dismissed the petition

Right of review was a substantive right and was always creation of relevant statute

If power of recalling the order with ultimate object of review was not available in the relevant statute then same could not be invoked

Power of review was not available to said Court on the basis of general principles or by virtue of S. 20, General Clauses Act, 1897

Applicants had failed to point out any provision of law in the Punjab Undesirable Cooperative Societies (Dissolution) Act, 1939 whereby power to review his own order was entrusted to said Court

No illegality or jurisdictional defect had been pointed out in the impugned order passed by the Cooperative Judge

Constitutional petition was dismissed in circumstances.

Defendant raised objection to the jurisdiction of the court and sought decision on the issue of jurisdiction before decision on merits

Validity

Issue of jurisdiction of court being a question of law could be raised by any party at any stage of the trial, even court itself was required to examine whether it had jurisdiction to seize with the matter or not

Merely because a party to the proceedings had not taken objection relating to jurisdiction, such a party would not be barred from taking such objection at any stage of proceedings

Parties could not confer jurisdiction on a court where the court was not vested with jurisdiction

Proceedings without jurisdiction were coram non judice

Question of (absence of) jurisdiction vitiated the entire proceedings

Section 20, C.P.C. provided that every suit would be filed in a civil court within whose local limits or jurisdiction the defendant resided or carried on business or where the cause of action wholly or in part occurred

Under S.28 of the Contract Act, 1872 every agreement by which any party thereto was restricted absolutely from enforcing his rights under or in respect of any contract by legal proceedings in the ordinary tribunals or which limited the time within which any party may thus enforce his rights was void to that extent

Civil courts exercised jurisdiction under Civil Procedure Code, 1908, where such courts did not have jurisdiction under the Civil Procedure Code, 1908, jurisdiction would not be conferred on civil courts by mutual agreement of parties to a dispute

Where two or more courts had jurisdiction to try a suit under Civil Procedure Code, 1908, parties could select a particular court having territorial and pecuniary jurisdiction for the determination of their dispute

Trial Court had to determine first whether it had jurisdiction or not

Revision was allowed with direction to Trial Court to treat the issue of jurisdiction as preliminary and decide the same prior to decision of other issues.

Recovery suit filed by plaintiff-institution was solely rejected on the ground that it had failed to comply with Ss. 9(1) & (2) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Validity

Defendant in all fairness admitted that omission/mistake on part of plaintiff-institution was rectifiable and if plaintiff amended the plaint within a period of 15 days, defendant had no objection

Supreme Court in view of the fair stand taken by the defendant set aside the impugned judgment and directed the plaintiff to file amended suit within 15 days

Appeal was allowed accordingly.

Recovery suit filed by plaintiff-institution was solely rejected on the ground that it had failed to comply with Ss. 9(1) & (2) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Validity

Defendant in all fairness admitted that omission/mistake on part of plaintiff-institution was rectifiable and if plaintiff amended the plaint within a period of 15 days, defendant had no objection

Supreme Court in view of the fair stand taken by the defendant set aside the impugned judgment and directed the plaintiff to file amended suit within 15 days

Appeal was allowed accordingly.

Order XXI, Rr. 89 & 90, C.P.C. mandated that the objector should deposit the amounts mentioned in the said Rules along with the objection application

In the absence of the deposit, the application and or objection could not be entertained by a Banking Court.

Bid sheet was prepared by the auctioneer appointed by the Banking Court, who conducted the auction proceedings and submitted his detailed report

Said report reflected that proper steps were taken for conducting the auction proceedings and the highest bid was accepted, which was more than the value of the property shown by the judgment-debtor

Judgment-debtor contended that auction proceedings were irregular and illegal but filed an application before the Banking Court under S. 19(7) of Financial Institutions (Recovery of Finances) Ordinance, 2001, instead of making an application under O. XXI, Rr. 89 & 90, C.P.C.

Even if objection petition of judgment-debtor was treated as an application under O.XXI, Rr.89 & 90, C.P.C., judgment-debtor had failed to deposit the amounts as mandated in the said Rules, without which the objections could not be entertained

Banking Court had issued notices in terms of S. 19(7) of Financial Institutions (Recovery of Finances) Ordinance, 2001 in the execution proceedings and thereafter it followed the inbuilt mechanism provided therein, which was summary in nature, thus the Banking Court was not bound to follow the procedure provided under O.XXI, C.P.C.

Highest bidder had deposited the auction amount within the stipulated time, and possession of property in dispute had already been delivered to the highest bidder

No inherent defect was found in the procedure adopted by the Banking Court in terms of S.19(7) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Appeal was dismissed accordingly.

Once the Banking Court adopted the summary procedure provided under S. 19 of Financial Institutions (Recovery of Finances) Ordinance, 2001, it was not bound to follow the procedure provided under O.XXI, C.P.C. in execution proceedings.

Order XXI, Rr. 89 & 90, C.P.C. mandated that the objector should deposit the amounts mentioned in the said Rules along with the objection application

In the absence of the deposit, the application and or objection could not be entertained by a Banking Court.

Bid sheet was prepared by the auctioneer appointed by the Banking Court, who conducted the auction proceedings and submitted his detailed report

Said report reflected that proper steps were taken for conducting the auction proceedings and the highest bid was accepted, which was more than the value of the property shown by the judgment-debtor

Judgment-debtor contended that auction proceedings were irregular and illegal but filed an application before the Banking Court under S. 19(7) of Financial Institutions (Recovery of Finances) Ordinance, 2001, instead of making an application under O. XXI, Rr. 89 & 90, C.P.C.

Even if objection petition of judgment-debtor was treated as an application under O.XXI, Rr.89 & 90, C.P.C., judgment-debtor had failed to deposit the amounts as mandated in the said Rules, without which the objections could not be entertained

Banking Court had issued notices in terms of S. 19(7) of Financial Institutions (Recovery of Finances) Ordinance, 2001 in the execution proceedings and thereafter it followed the inbuilt mechanism provided therein, which was summary in nature, thus the Banking Court was not bound to follow the procedure provided under O.XXI, C.P.C.

Highest bidder had deposited the auction amount within the stipulated time, and possession of property in dispute had already been delivered to the highest bidder

No inherent defect was found in the procedure adopted by the Banking Court in terms of S.19(7) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Appeal was dismissed accordingly.

Once the Banking Court adopted the summary procedure provided under S.19 of Financial Institutions (Recovery of Finances) Ordinance, 2001, it was not bound to follow the procedure provided under O.XXI, C.P.C. in execution proceedings.

High Court allowed said application and directed defendants to deposit Rs. 400,000 with decree-holder/Bank for setting aside ex parte decree

Defendants deposited a cheque of Rs.400,000 with the Bank, however the same was dishonoured due to lack of funds

Plea of defendants that on the day of presentment of cheque by the Bank, one of defendants' customers withdrew Rs. 30,000 from the account, and as such the cheque was dishonoured; that cheque had been issued to the bank bona fidely, therefore more time might be allowed to the defendants to deposit Rs. 400,000

Validity

Defendants were given concession by the High Court directing them to deposit Rs.400,000, being the expenses of auction as the plaintiff/decree-holder Bank had incurred the said expenses towards payment of court auctioneer fee and other charges etc.

Suit filed by Bank was for recovery of Rs. 58,482,336.57 and if defendants were unable to deposit Rs.400,000, how would they pay the decretal amount

Intention of defendants was not bona fide and they were trying to linger on disposal of recovery suit

Defendants on the present date of hearing were again not in a position to deposit amount of Rs. 400,000, and as such default on their part was contumacious

High Court set aside the order whereby ex parte decree was set aside subject to depositing of Rs. 400,000 with the Bank, and resultantly ex parte decree against defendants was revived

High Court appointed Court Auctioneers for conducting auction of property

Application was dismissed accordingly.

Limitation for filing leave to appear and defend in suit under O.XXXVII, Rr.1 & 2, C.P.C. was ten days under Art.159 of the Limitation Act, 1908 which would run from service of summons

Service of summons upon clerk of jail did not fulfil requirement of law

Where limitation was prescribed by legislature to be ascertained from date of service, the same could not be ascertained from date of knowledge

Any word should be construed in its general meaning, and deviation from general meaning would render the intent of legislature redundant

Trial Court should have ordered production of defendant from jail for service of summons and supply of copy of plaint while exercising powers conferred under O.V, R.24, C.P.C.

Courts should do substantial justice instead of knocking out a person due to non-fulfilment of certain formalities

Defendant, in circumstances was not served with any summons properly

Dismissal of petition on ground of limitation was not justifiable

Summons in suit filed under O.XXXVII, Rr.1 & 2, C.P.C. were issued in Form No.4 of Appendix B of C.P.C. whereunder summons had to be accompanied by copy of plaint

Defendant could not obtain copy of plaint as he was in jail; his counsel could not be supposed to obtain copy of plaint

Once a defendant had properly been served with summons in a suit, repetition of service was not required

Petition for leave having been filed within ten days from service, application under S.5 of Limitation Act, 1908 was not required

Penal provisions of O.XXXVII, Rr.1 & 2, C.P.C. could only be invoked against a defendant where notices were issued properly in prescribed form

When the law required an act to be done in a particular manner, that act had to be done in that manner alone; such dictate of law could not be termed as technicality

Trial Court had committed material illegality in dismissing petition on point of limitation

Revision was accepted.