Suit for recovery

One of the defendants (applicant) filed an application under R. 17 of O. VI of the Code of Civil Procedure, 1908, seeking amendments in the application for leave to defend (PLA)

Plea of the applicant was that he had been wrongly impleaded as a defendant (customer of the plaintiff /Bank ) whereas he was no more a partner; neither he was mortgagor nor an alleged guarantor for enforcement of liability of other defendants arrayed by the plaintiff /Bank, as such, the guarantees appended with the plaint contained fake and fictitious signatures of the applicant

Plaintiff / Bank raised objection on the maintainability of application seeking amendment on the ground that the Financial Institutions (Recovery of Finances) Ordinance, 2001 ('the Ordinance, 2001') was a special law and as such, no miscellaneous application could be filed and entertained before the decision of PLA

Held, that where amendments sought for were supplementary and not destructive, the same could be allowed to be raised and even the limitation would not come in its way

The only consideration should be that plea(s) should not be inconsistent or divergent to the pleas raised earlier and there was no bar to move such an application

Principle of amendment in pleadings enshrined in O.VI, R.17 of the C.P.C. could be pressed with respect to amendment in the PLA

In the present case, the applicant in his original joint PLA with other defendants already raised the plea(s) he had raised in his application seeking amendment in PLA

Applicant while placing reliance upon two previous letters ('letters-in-question'), had taken an additional plea that the waiver of special condition had been contained in the last Facility Offer Letter

Plaintiff / Bank (in its reply to application seeking amendment) had not disowned the letters-in-question, though it took / stated a different version

Applicant primarily pleaded that the said letters be placed on record and their effect be considered while deciding the PLA

High Court directed that let the letters-in-question be made part of record and the same would be considered while deciding the PLA in the light of respective stances of the applicant and the plaintiff / Bank

Application under O. VI, R. 17 of Civil Procedure Code, 1908, filed by defendants, was allowed accordingly.

Conditional grant of leave is contingent upon the satisfactory fulfillment of the stipulated terms and failure to meet those terms effectively nullifies the leave granted

Plain reading of R. 3(2) of O. XXXVII of C.P.C. clearly establishes the court's authority to grant conditional leave

The power of the Trial Court to grant leave to defend subject to conditions is, thus, a matter of judicial discretion

Implicit in such authority to pass conditional order is the understanding that the fulfillment of the condition is crucial for the leave to remain effective.

The petitioner/defendant filed an application for leave to defend the suit, which was accepted subject to furnishing surety bonds

Respondent/plaintiff moved an application alleging that the surety bond submitted by the petitioner/defendant was fake and forged

The Trial Court, after conducting an inquiry, found the surety bond to be fake

Consequently, the court recalled its earlier order granting conditional leave and dismissed the petitioner's/defendant's application to defend the suit

Subsequently, petitioner filed the present civil revision arguing that the impugned order was illegal and that he should have been allowed to furnish fresh surety

Primary legal question in the present civil revision was as to "whether a court could retract an order granting leave to defend in a summary suit under O. XXXVII of the C.P.C., when the condition precedent attached to that leave had not been genuinely fulfilled?"

Held: When leave to appear and defend the suit was granted subject to a specific condition, the very efficacy of that leave depended on fulfillment of that condition

If the condition was not met in its true letter and spirit, the order granting conditional leave became inoperative

In the present case, the trial court, after conducting an inquiry that included summoning and recording of the statement of the relevant patwari, arrived at the finding that the petitioner/defendant submitted forged surety bonds, which clearly constituted non-compliance of the conditional order granting leave to defend

The submission of a fake surety bond was not merely a technicality rather it constituted an act of fraud committed with court

Therefore, no illegality or material irregularity in the findings of the court below was pointed out warranting interference by the High Court in exercise of its revisional jurisdiction under S. 115 of the C.P.C.

Civil revision being devoid of any merit was dismissed in limine.

Legal heirs of original consumer claimed all dues had been discharged asserting that they were not liable for any miscalculation by meter-reader

Gas supply was disconnected

Issues were framed and evidence was recorded

Suit filed by SNGPL was dismissed, and so was the appeal

Question necessitating analysis included as to whether the department could under the contract recover the amount claimed?; what were the agreed terms and conditions of the contract?; whether the respondent/ consumer could avoid the responsibility to pay the amount?; whether the evidence produced by petitioner factually established short-billing?; and whether any mistake in recording the billing charges incorrectly could exonerate the consumer to avoid liability on detection of under-billing?

Both courts below concluded that it was the fault of meter-reader and demand from consumer was illegal

Held: The court below did not take the trouble of looking into the evidence and thereafter recording findings by giving reasons for the conclusions drawn

It was ignored that mere mistake of the departmental representative in process of calculation of bill could not be a ground to exonerate the consumer from paying the actual dues for consumption of gas and that the liability was to be regulated by terms agreed in the contract

Revision petition was accepted and the matter was remanded to the Appellate Court for decision afresh.

On failure of the defendant to file leave to defend application, the Trial Court passed ex-parte judgment and decree; later, Trial Court dismissed the defendant's application under O. IX, R. 13, C.P.C. read with S. 12(2), C.P.C., seeking to set aside the original judgment and decree

Validity

Article 159 of the Limitation Act, 1908 mandates a period of ten (10) days for submitting a leave to defend application in a suit governed by the summary procedure outlined in O. XXXVII of Civil Procedure Code, 1908

Said period commences from the date of service of the summons

Order XXXVII, R. 2, C.P.C., explicitly outlines the procedure for summons, requiring it to be served in Form No.4 of Appendix B, which coincides with the 10-day period stipulated in Art. 159 of Limitation Act, 1908; significance of both the contents and language of Form No.4 necessitates that the party served with the summons has 10 days from the date of service to submit its Leave to Defend Application

In the present case, according to the relevant Diary (Order) Sheet, the service upon the appellant/defendant was held good based on the report of bailiff

However, said report revealed that Appellant was served on such date that the ninth (9th) day (from date of service by bailiff) was next date of hearing i.e. before the full 10-day period as provided by law would have elapsed

When a statute grants a defendant a statutory right to seek leave of the Court within a specified time frame (in the present case 10 days from the receipt of the summons), it establishes a clear procedural safeguard

Trial Court is expected to respect and uphold this statutory provision

By waiting for the expiration of the stipulated period before taking any action, the court ensures that the defendant has a reasonable opportunity to exercise his legal rights and present his defence

In the absence of such a waiting period, a defendant's ability to avail himself of the statutory right is compromised

Striking off the defence of a defendant before the expiration of the specified time frame undermines the fundamental principles of fairness and due process inherent in legal proceedings

In the present case, the Trial Court unfairly and prematurely deprived the appellant of his statutory entitlement to seek leave within the prescribed period, by curtailing it by just one day, thereby impeding his ability to mount an adequate defence

Under Rr. 2 & 3 of O. XXXVII, C.P.C., proceedings are summary; failure of the defendant to apply for defence within 10 days of service leads to a deemed admission of allegations in plaint, which may in turn result in a decree

Court must ensure the defendant is served and comprehends the proceedings; hence, the Legislature mandated specific forms for the plaint and summons

Therefore, it is imperative for a court to exercise caution and patience in such matters, refraining from striking down the defence of a defendant ahead of time

By allowing the statutory period to run its course, a Court ensures that the defendant's rights are fully respected and that the legal process proceeds in a manner consistent with the principles of justice and equity

High/Appellate Court set-aside the ex-parte impugned judgment and decree and the dismissal order of the Appellant's application (seeking setting aside of the original impugned judgment and decree) with the direction that the appellant shall file his leave to defend application in the suit within ten (10) days from today

Appeal, filed by defendant, was allowed accordingly.

On failure of the defendant to file leave to defend application, the Trial Court passed ex-parte judgment and decree; later, Trial Court dismissed the defendant's application under O. IX, R. 13, C.P.C. read with S. 12(2), C.P.C. seeking setting aside of the original judgment and decree

Validity

In the present case, according to the relevant diary (order) sheet, the service upon the appellant/defendant, based on the report of bailiff, was held good by the Trial Court

However, simultaneously and paradoxically, in the same order (date on which service was held good) as well as on the following date (which was also the date on which the appellant was barred from filing Leave to Defend application and his defence was struck off), the Trial Court directed the respondent/plaintiff to file courier receipts and acknowledgment of delivery ("AD")

Thus, it was apparent that the Trial Court considered the service as valid despite the absence of essential documents (like courier receipts and AD)

Said anomaly raised significant concerns and called into question the thoroughness and reliability of the Trial Court's evaluation of service validity

High Court set-aside the ex-parte impugned judgment and decree and the dismissal order of the appellant's application (seeking setting aside of the original impugned judgment and decree) with the direction that the appellant shall file his leave to defend application in the suit within ten (10) days from today

Appeal, filed by defendant, was allowed accordingly.

Judgment acquitting the accused in a criminal case is not binding on civil matters and does not preclude institution and prosecution of a civil suit for recovery of dues

Civil and criminal proceedings

Distinct standard of proof

Appellant/Sui Southern Gas Company Limited (SNGPL), filed a summary suit for recovery against the respondent under S. 6 of the Gas (Theft Control and Recovery) Act, 2016 (the Act) alleging gas theft

The appellant claimed that during an inspection the respondent's gas meter was found tampered with, having a broken index and glass

A joint gas load survey was conducted, and the meter was replaced

The meter was later tested in respondent's presence and again found tampered

An FIR was lodged, and the appellant's claim assessment committee determined a loss of Rs. 439,700/

The appellant prayed for recovery of the amount and other reliefs, however, the Trial Court dismissed the suit in limine, citing the respondent's acquittal in the related criminal case

Pivotal question for determination by the High Court was as to "Whether a civil suit for recovery was maintainable under the Gas (Theft Control and Recovery) Act, 2016, despite the acquittal of the accused in the corresponding criminal proceedings?"

Held: The standard of proof in criminal proceedings (beyond a reasonable doubt) was distinct from the standard of proof in civil proceedings (preponderance of probability)

Acquittal of an accused in a criminal case did not, in itself, preclude the institution and successful prosecution of a civil suit for the recovery of dues

Consequently, the findings of a criminal court were not determinative of the outcome in a civil court addressing related matters

The determinations rendered in criminal proceedings did not ipso facto dictate the adjudication of civil liabilities

In the present case, the Trial Court dismissed the suit in limine based solely on the acquittal of the respondent in the criminal case, without considering the merits of the civil claim or adhering to the due procedure as laid down under Ss. 6 & 7 of the Gas (Theft Control and Recovery) Act, 2016

Section 6 of the Act authorizes both consumers and gas utility companies to file cases before gas utility courts under applicable civil or criminal procedure laws, supported by relevant documents such as gas bills or service agreements

It outlines the procedural requirements for institution of the suits, including specific content to be included in the plaint, particularly for utility companies, and establishes methods for serving summons through personal delivery, postal or courier services, and newspaper publication

Section 7 governs the defendant's right to contest the suit by mandating an application for leave to defend within 21 days of service

This application must be accompanied by a written statement identifying legal or factual disputes and supported by relevant documents

Failure to file such an application, or to meet its requirements, allows the Court to treat the claims as admitted and pass a decree accordingly

The Court may grant leave to defend only if substantial questions of law or fact are raised, and may impose conditions such as the deposit of claimed dues

Utility Court is also empowered to frame issues relating to such substantial questions, attach conditions to the grant of leave, and record evidence on those issues

In these circumstances, the approach adopted by the Trial Court was contrary to the spirit and intent of law

Consequently, the impugned order passed by the Trial Court was unsustainable in law and could not be upheld

Consequently, the impugned order was set aside and the suit was remanded to the trial court to be decided afresh on its own merits, strictly in accordance with the procedure stipulated under the Gas (Theft Control and Recovery) Act, 2016, and in adherence to the principles of natural justice

Appeal was accepted, in circumstances.

Under Art. 84 of the Qanun-e-Shahadat, 1984, the Court enjoined plenary powers to itself compare the signature along with other relevant material to effectively resolve the main controversy

High Court compared the signatures of appellants on relevant sanction letter with admitted signatures on sanction advice and found them similar

Appellants could not deny said similarity on both documents

Thus, the questions regarding non-filing of application for renewal of finance facility and non-execution of other documents did not arise

Appellants were rightly held disentitled for grant of leave

No illegality or infirmity was noticed in the impugned judgment and decree passed by the Banking Court

Appeal filed by the customer was dismissed, in circumstances.

Record revealed that claim of the respondent/Bank was supported by as many as six documents having been annexed with the plaint, among which the statement of accounts was certified the within the meaning of S. 4 of the Bankers' Books Evidence Act, 1891, therefore, there was no doubt in its authenticity and validity

Appellant/customer disputed the veracity of annexed documents through leave application without any documentary proof, thus, it did not constitute a plausible defense

Appellants failed to present any substantial question of fact or law, which needed to be tried or investigated into

Appellants did not append any proof regarding alleged repayment which were suppressed by the respondent/Bank

In banking suits, the parties had no option to make general allegation/assertions, especially in respect of amounts but must be absolute and specific in said regard

Appellants were rightly held disentitled for grant of leave

No illegality or infirmity was noticed in the impugned judgment and decree passed by the Banking Court

Appeal filed by the customer was dismissed, in circumstances.

Under O. XXXVII, R.3(2), C.P.C. Trial Court has been vested with reasonable discretion to grant leave conditionally or unconditionally on terms it deems suitable in the circumstances of each case so long as such a discretion is exercised reasonably without being illegal, arbitrary, capricious or fanciful

Grant of conditional or unconditional leave is linked to the plausibility of the defence and ultimate success or failure in the suit is not the consideration for the refusal or grant of leave, instead, the focus should be on the fact that whether the grounds stated in the application for permission to defend the suit are plausible, and if the defendant has an arguable case

There is no rule that if the defence is credible the defendant must be granted unconditional leave

If the credibility of the defence is sufficient grounds for granting leave to defend the suit, it does not guarantee or entitle a defendant to unconditional leave

Where the statute itself confers upon the Court unrestricted discretionary powers, it would be inappropriate to establish or specify a general or standard guideline (i.e. to lay down a rule of thumb) for the exercise of such powers

Appellate court generally refrains from interfering with the exercise of discretion by the Trial Court (or will not substitute its own discretion for that of the Trial Court) unless it is shown to have been based on irrelevant or extraneous considerations, or exercised arbitrarily, whimsically or perversely

Exercise of discretion by the Trial Court in passing the initial order conditionally granting leave to defend was free from any material defect and the defence presented in the leave to defend application did not warrant intervention by the Appellate Court or compel to overturn the Trial Court's decision

First appeal was dismissed accordingly.

Wording of S. 10(1) states that in any case in which the summons has been served on the defendant under S. 9(5), the defendant shall not be entitled to defend the suit unless he obtains leave from the Banking Court

While S. 10(3) gives a chance to the defendant to file leave to defend containing substantial questions of law as well as of fact.

Respondent/plaintiff filed suit for recovery under O.XXXVII, C.P.C against appellant/defendant with averment that respondent paid amount as loan in presence of witnesses and appellant/defendant handed over to respondent/plaintiff a cheque and said cheque was dishonoured due to insufficient funds

Appellant /defendant denied the receipt of loan from respondent with the claim that disputed cheque was handed over to respondent as zar-e-zamanat and furthermore some amount was returned by him to respondent after the initiation of criminal proceedings against appellant/defendant

Trial Court decreed the suit

Held, that there was no denial of fact that disputed cheque was issued, suit was instituted on the basis of cheque amount and respondent/plaintiff admittedly received said some amount from appellant/defendant before filing suit

While appearing as witness, respondent/plaintiff conceded about the part-payment in cross-examination but by concealing the fact intentionally failed to plead that fact in his plaint and simply filed a suit for recovery of cheque amount

Question was as to what the term "sum of amount undertaken or ordered to be paid to payee" meant in a case where the admitted liability of the drawer of the cheque got reduced, on account of part-payment made by him, after issuing the cheque

Expression "sum of amount undertaken or ordered to be paid to payee" would mean the amount of the cheque alone in case the amount payable by the drawer but, could it be said the expression "sum of amount undertaken or ordered to be paid to payee" would mean the amount of cheque, even if the actual liability of the drawer of the cheque had got reduced on account of some payment(s) made by him towards discharge of the debt or liability in consideration of which cheque in question was issued

If it was held that the expression "sum of amount undertaken or ordered to be paid to payee" would necessarily mean the amount of cheque in every case ,the drawer of the cheque would be required to make arrangements for more than the cheque amount payable by him to the payee of the cheque in case of part-payment by the drawer of cheque to the payee and obviously that could not have been the intention of the legislature to make a person liable to pay more amount than amount payable through cheque

If the drawer of the cheque was made to pay more than the amount actually payable by him, the inevitable result would be that he would have to chase the payee of the cheque to recover the excess amount paid by him

Even if the admitted liability of the drawer of the cheque had been got reduced, on account of certain payment(s) made after issuance of cheque, the payee would not be entitled to present the cheque for the whole of the amount to the banker for encashment or in such a case, if cheque was dishonoured for want of funds, a cause of action compulsorily would arise to file a suit for recovery of cheque amount under O.XXXVII, C.P.C

High Court observed, the drawer of cheque could make part-payment of the amount of the cheque, but that could easily be avoided by payee of the cheque, either by taking new cheque of the reduced amount from the drawer or by making an endorsement through a note on the cheque by the drawer acknowledging the part-payment and then presenting the cheque for encashment of only the balance amount due and payable to him

Appeal was allowed with direction to Trial Court to return the plaint to respondent for filing the same before an ordinary civil court of plenary jurisdiction.

Application for leave to defend the suit was dismissed by the Trial Court declaring the same as barred by time and subsequently decreed the suit of the respondent

Held, that appellant appeared before the Trial Court and copy of plaint was supplied to him

Application for leave to defend was filed within ten days of the time when he was provided copies

Service in the summary suit was to be effected through summons available in the Appendix 'B' of Form-4 of the Civil Procedure Code, 1908, wherein it was mentioned that "within 10 days from the service" the defendant had to obtain leave to appear and defend the suit

Record revealed that the service, in the present case, was effected on 16-03-2018, therefore, within ten days meant excluding 16-03-2018, the date of obtaining of leave to appear and defend, was 26-03-2018

Application for leave to appear and defend the suit, therefore, had been filed within the prescribed period of limitation

High Court set aside impugned decree and judgment, and remanded the matter

Appeal was disposed of accordingly.

Respondent/plaintiff alleged that the appellant borrowed certain amount from the respondent; that he signed/issued promissory note and receipt in presence of witnesses; that the appellant refused to return the said amount

Suit was decreed by Trial Court

Appellant/defendant contended that upon signatures by the witnesses, promissory note stood converted into the surety bond, therefore lost its knack of negotiable instrument; that a litigation was already pending between father of the appellant and the respondent which was also brought on record; that parties having bitter relationship could not possibly enter into the transaction involving mutual trust; that there were discrepancies in the evidence including the difference of time of lending money that normally the people do not have such a huge amount at the houses

Validity

Promissory Note was not defined in the Stamp Act and for the purposes of definition/explanation of promissory note the Stamp Act was dependent on the Negotiable Instruments Act, 1881 (Act, 1881)

Act, 1881, was not just enacted as amending statute but also to define cheques, bill of exchange and promissory notes, but to lay the whole law regarding the said instruments

Sections 4 & 13 of Negotiable Instruments Act, 1881, did not provide for any requirement of attestation by witnesses or attestation if made by witnesses having some consequences and bearing on the nature of the instrument

Not necessitating such attestation on the promissory note simply had effect that requirement of Art. 17(2)(a) of the Qanun-e-Shahadat, 1984, was not mandatory to be fulfilled

If attestation was made, it would not automatically stand converted into a Bond, which by its own nature and characteristics and purpose was distinct from promissory note

Intention of parties could also be seen as to whether the instrument was intended to be a negotiable instrument or it was just a certificate of debt or contained merely an obligation to pay or to do something upon happening or not happening of certain event

Disputed promissory note had fulfilled all requirements

Two witnesses supported the stance of respondent and also deposed that thumb impression was given on the promissory note

Documents showed that parties did not involve in direct litigation between them, who were close relatives

Appellant had denied to avail opportunity of having comparison of thumb impression

Presumption was that negotiable instrument was made/drawn for consideration; and that holder thereof was a holder in due course

Appellant though adopted the stance that the negotiable instrument/promissory note was forged one but he never reported such incident to the authorities or taken any step to initiate criminal proceedings against the respondent despite lapse of several years

Appellant also did not make any effort to get instrument cancelled on the civil side

Appeal was dismissed accordingly.

Applicability of limitation on execution proceedings under the Financial Institutions (Recovery of Finances) Ordinance, 2001

Scope

Appellant decree-holder Bank impugned order of Banking Court whereby its application for revival of execution proceedings was dismissed on ground that same was barred by limitation

Validity

Under S. 19 of Financial Institutions (Recovery of Finances) Ordinance, 2001, it was clear that decree-holder was empowered to adopt any means for realization of decree, with or without intervention of court and it was not possible that if decree-holder sought to satisfy decree without intervention of court, then doors were permanently closed for it adopt satisfaction of decree through intervention of court if the decree-holder was unable to materialize satisfaction of decree without intervention of court

Appellant decree-holder Bank had filed application for revival of execution proceedings which was within limitation prescribed by Art. 181 of Schedule to Limitation Act, 1908

Under Financial Institutions (Recovery of Finances) Ordinance, 2001, there existed no requirement for a decree-holder to file separate execution petition as it was duty of Banking Court itself to convert a suit into execution proceedings after decree

Application filed by appellant in present case, at most could be pursued to trigger machinery of court and start execution proceedings for realization of decree and thus such application could not be hit by law of limitation or S. 48 of C.P.C.

In the present case, decree remained unsatisfied and mortgaged property as a result could also not be redeemed, therefore impugned order left both parties remediless which could not be allowed

Impugned order was set aside, and execution proceedings were revived before Banking Court

Appeal was allowed, accordingly.

Record showed default on the part of respondents in repayment of obligations within stipulated time whereupon Banking Court was obliged to pass decree to that effect and grant cost of funds as per law

Default in discharge of such obligation not only incurred the cost of funds under S. 3(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, but was also actionable under S. 9 of the Ordinance

Appeal was allowed and appellant's suit was decreed to the extent of cost of funds from the date of default till the date of realization to be determined/calculated by Banking Court as per law.

Adding of necessary party to appellate proceedings under S. 22 of Financial Institutions (Recovery of Finances) Ordinance, 2001

Scope

Appellant Bank sought to add name of respondent to appeal against decree of Banking Court, and said respondent was defendant in suit filed by appellant Bank

Per S. 22 of Limitation Act, 1908, limitation started to run against newly added respondent on date he was so impleaded

Appeal, in the present case, was filed in year 2014 and application under O. XLI, R. 30, C.P.C. to add respondent, was filed in the year 2020, after a delay of six years, when appeal against said respondent had become barred by limitation

Said respondent was necessary party as impugned order of Banking Court was passed in his favour with direction to appellant Bank to release said respondent's personal guarantee and property

In absence of said respondent, impugned decree of Banking Court could not be set aside as he was beneficiary of said order

Application under O. XLI, R. 20, C.P.C. and main appeal were dismissed, in circumstances.

Contention of defendant, inter alia, was that the Banking Court did not properly examine the record and had not scrutinized the statement of account filed by plaintiff Bank while passing impugned order

Validity

Perusal of record revealed that Banking Court had rightly computed outstanding amount owed by defendant and no discrepancy was pointed out by defendant in statement of account filed by plaintiff bank, therefore Banking Court was justified on relying upon the same for determination of decretal amount

No illegality existed in impugned order

Appeal was dismissed, in circumstances.

Respondent/ plaintiff filed suit for recovery against defendant/appellant on the basis of a cheque, which was decreed by Trial Court

Held, that respondent/plaintiff was required to prove as to whether he was entitled to recover certain amount from appellant/defendant on the basis of cheque and evidence of respondent was materially discrepant and inconsistent on several counts

Due date of cheque was 07.05.2012 and in the plaint respondent/ plaintiff categorically stated that on 02.05.2012 he was going to encash the cheque but it was lost on the way and it remained unexplainable that as to why the cheque which was encashable on 07.05.2012 was being taken for encashment on 02.05.2012

Perusal of police report and statements of respondents during his examination and cross-examination showed four different dates of the loss of cheque

Respondent in his cross-examination also stated that he came to know about the lost cheque on the day of its encashment

Respondent failed to prove his case as the stance put forth by him was hit by the legal maxim "secundum allegata et probata" (no one could be allowed to prove a fact which was not pleaded under the law ) and "allegans contraria non est audiendus" (a person alleging contradictory facts should not be heard)

Appeal was allowed and suit for recovery was dismissed.

Respondent/plaintiff claimed that appellant demanded and received an amount of Rs.18,00,000/- and issued a cheque which was dishonoured

Appellant's application for leave to defend was accepted and he failed to comply with the Trial Court's direction to deposit surety bond equivalent to the amount mentioned in the cheque

Trial Court recalled its order due to non-compliance and decreed the suit

Appellant contended that witnesses had not proved execution of the cheque; that cheque was not produced through Bank employees and had not been exhibited in the statement of respondent as witness; that FIR lodged by respondent was cancelled by the police after due investigation as cheque was issued by the appellant in lieu of the alleged amount; that the appellant was a wealthy person, settled abroad since long and had no need to borrow said amount; that without framing the issues ex-parte evidence was recorded by the learned trial Court; that due to "Corona" virus crises and strike of revenue officials the appellant could not deposit the surety bond within time; that the appellant was not present in the Trial Court; that Trial Court took harsh step under O.XVII, R.3, C.P.C. instead of the initiation of the proceedings under O.XVII, R.2, C.P.C.; on the date of hearing for recording of evidence, but on that date evidence was recorded, the suit was decreed and the suit was converted into execution proceedings and Court issued the show-cause notice to appellant/judgment debtor

Validity

Appellant was given by the trial Court three opportunities to deposit the surety bond but he failed to deposit the same

Trial Court adjourned the case for recording of the ex-parte evidence and on the next hearing evidence of the respondent was recorded and the suit was decreed

Appellant did not file any application to get set aside the order of Trial Court, nor any application for extension of time for deposit surety bond

Appellant, after initiation of execution proceedings, did not appear before the Court rather he filed present appeal and did not comply with its direction to deposit 50% of the decretal amount within 15 days

Appellant's conduct/attitude reflected that he was not entitled for any relief

Appellant, in his application for leave to defend, admitted that the cheque was issued by him, therefore, Trial Court had no need to record any evidence to prove such admitted fact

No plausible explanation was tendered by the appellant for non-depositing of the surety bond during the trial and non-depositing of the 50% decretal amount in execution proceedings

Record showed that, appellant's counsel was present but order of the Court was not complied with nor any application for extension of time was submitted

Appeal was dismissed accordingly.

Respondent filed written statement wherein he pleaded that some amount was payable by the appellant/plaintiff relying on photocopies of two cheques

Suit of the appellant was dismissed and the claim of respondent was decreed

Appellant contended that when suit of the appellant/plaintiff was dismissed, the set-off claim could not survive, which at best could have been considered as defence

Validity

After filing of written statement/counter-claim, Trial Court fixed the case for framing of additional issues and called/recorded the evidence

Case was never fixed for filing of written statement/rejoinder to the counter claim

Without calling upon the appellant or putting the notice to file written statement/replication/rejoinder against the counter claim of the respondent/defendant, Trial Court had driven the negative inference and took the failure to file the rejoinder/written statement as admission to the claim of respondent, which clearly caused prejudice to the case of the appellant

Documents in question i.e. cheques along with dishonour-slips being in the possession of the Police in connection with criminal case registered under S.489-F of P.P.C., were not beyond the reach of learned Trial Court and the original could have easily been procured/compared/exhibited

Photocopies of the dishonour-slips were on record without examining its maker

Examination-in-chief evidence that objection was raised when such photocopies were exhibited in the Trial Court

Said objection was not decided by the Trial Court

Reliance on such photocopies, rather bringing the same on record when the primary evidence was readily available, was contradictory to provisions of Qanun-e-Shahadat, 1984

Appeal was allowed accordingly.

On 19.12.2020, attendance of the petitioner was marked and he was informed that he could file his application for leave to defend the suit within ten days

Petitioner's right of filing the application for leave to defend was closed by District Judge

Order-sheet nowhere showed that the petitioner had been served summons in the prescribed Form 4 in Appendix "B", therefore, the mandatory requirement of law had never been complied with

Additional District Judge informed the petitioner that he may file his application for leave to appear and defend the suit, but no warning was given to the petitioner regarding consequences of his default

Such was mandatory to ensure that on the date when the summons was served on the defendant, he should be made fully aware of the plaintiff's claim and nature of suit by serving a copy of the plaint along with annexures

Question of computing limitation under Art. 159 of the Limitation Act, 1908, did not arise

Court's order did not reflect that petitioner was even allowed any opportunity to contact any of his relatives or any lawyer

Principle of equality of arms had been manifestly violated and the impugned order was void

Rivision petition was allowed accordingly.

Appellant had categorically stated in the application for leave to defend that promissory note was fraudulently and invalidly prepared

Such argument of appellant was required to be looked into by the Trial Court in its true perspective without prejudice to the earlier findings on the subject

Impugned order and decree were set aside

Matter was remanded to the Trial Court for fresh decision on merits

Appeal was disposed of accordingly.

After nine adjournments, right to file written statement of the petitioner was closed vide impugned order dated 06/02/2021

Petitioner's counsel cross-examined plaintiff/witness on 19/07/2021

Constitutional petition had been filed with the delay of more than 8 months after passing of the impugned order and after about 3 months of the said cross-examination

Petitioner had failed to point out as to how the impugned/ interim order was the consequence of an error of law or without/in excess of jurisdiction

Constitutional petition was dismissed accordingly.

Respondent expended a substantial sum to repair the vehicle and bring it into usable condition, however, when he went to have its registration with the motor vehicle authority transferred to his name he was informed that there was already another vehicle registered with the same number and that the documents produced by him were not genuine

Respondent filed suit in the civil court claiming damages in the sum of Rs. 10,00,000/- (of which Rs. 600,000/- was the total of the sums expended by him and the balance was by way of compensation)

Question as to whether the subject matter of the contract between the parties, was a 'motor vehicle' in howsoever badly damaged a condition it may have been, making the appellant (Insurance Company) liable to the respondent, or was it only a 'wreck' which was not a motor vehicle in any meaningful sense, and absolutely no regard had to be given to what the respondent intended to, or could, or actually did with it

Held, that in the insurance business the thing insured could be declared to be a "total loss" in two different senses

One was of it being an "actual total loss"; here, the sense was that the insured property had been destroyed or damaged to such an extent that it could be neither recovered nor repaired for further use

In this sense the insured property was reduced to just wreckage and nothing more

Other sense in which total loss was used was "constructive total loss"; this was the situation where the repair cost of the damaged insured property exceeded its market value if the repairs were undertaken, meaning it was not worthwhile to pay for the repairs or have them undertaken

In the present case the words 'total loss' had been used in the contract

Since the contract was created by the appellant, hence following the contra proferentem rule, any ambiguity in its meaning had to be resolved against the appellant

Words "total loss" used in the contract ought to be construed to have the meaning of "constructive total loss" i.e. the vehicle in question retained its character as such, and did not cease to be a thing of the kind that had been insured

Wreckage sold to the respondent was not mere wreckage, rather it was a vehicle, howsoever badly damaged it may have been and notwithstanding that the cost of the repairs may have exceeded the market value of the vehicle when repaired

Since what was sold was a vehicle, the respondent had an enforceable expectation that he would be able to use it as such in a lawful manner, i.e., to have it registered in his own name, but as he was unable to do so and clearly suffered loss, the burden of that loss must fall on the appellant

Suit of respondent had been rightly decreed by the Trial Court and the High Court

Appeal was dismissed.

Respondent expended a substantial sum to repair the vehicle and bring it into usable condition, however, when he went to have its registration with the motor vehicle authority transferred to his name he was informed that there was already another vehicle registered with the same number and that the documents produced by him were not genuine

Respondent filed suit in the civil court claiming damages in the sum of Rs. 10,00,000/- (of which Rs. 600,000/- was the total of the sums expended by him and the balance was by way of compensation)

Question as to whether the subject matter of the contract between the parties, was a 'motor vehicle' in howsoever badly damaged a condition it may have been, making the appellant (Insurance Company) liable to the respondent, or was it only a 'wreck' which was not a motor vehicle in any meaningful sense, and absolutely no regard had to be given to what the respondent intended to, or could, or actually did with it

Held, that in the insurance business the thing insured could be declared to be a "total loss" in two different senses

One was of it being an "actual total loss"; here, the sense was that the insured property had been destroyed or damaged to such an extent that it could be neither recovered nor repaired for further use

In this sense the insured property was reduced to just wreckage and nothing more

Other sense in which total loss was used was "constructive total loss"; this was the situation where the repair cost of the damaged insured property exceeded its market value if the repairs were undertaken, meaning it was not worthwhile to pay for the repairs or have them undertaken

In the present case the words 'total loss' had been used in the contract

Since the contract was created by the appellant, hence following the contra proferentem rule, any ambiguity in its meaning had to be resolved against the appellant

Words "total loss" used in the contract ought to be construed to have the meaning of "constructive total loss" i.e. the vehicle in question retained its character as such, and did not cease to be a thing of the kind that had been insured

Wreckage sold to the respondent was not mere wreckage, rather it was a vehicle, howsoever badly damaged it may have been and notwithstanding that the cost of the repairs may have exceeded the market value of the vehicle when repaired

Since what was sold was a vehicle, the respondent had an enforceable expectation that he would be able to use it as such in a lawful manner, i.e., to have it registered in his own name, but as he was unable to do so and clearly suffered loss, the burden of that loss must fall on the appellant

Suit of respondent had been rightly decreed by the Trial Court and the High Court

Appeal was dismissed.

Words used in Ss. 9(5) & 10(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 had to be read in their ordinary meaning, and therefore it was obligatory upon defendant to file application for leave to defend within thirty days of valid service in terms of S. 9(5) of the Ordinance

Application for leave to defend filed after passage of thirty days from time of valid service would be liable to be rejected.

Section 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001 required strict compliance with mandatory requirements for application for leave to defend stated therein, and non-compliance of same would result in rejection of application for leave to defend.

Failure to comply with mandatory requirements of S. 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001, effect of

Application for leave to defend was dismissed by Banking Court

Contention of defendant, inter alia, was that application for leave to defend ought to have been allowed

Validity

Defendants had failed to make compliance with required parameters of S. 10(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001 and therefore S. 10(6) of said Ordinance would come into play and their application for leave to defend was necessarily liable to be rejected

No illegality in impugned order of Banking Court

Appeal was dismissed, in circumstances.

Scope-Defendant impugned order of Banking Court whereby its application for leave to defend was rejected and suit was decreed in favour of plaintiff Bank

Contention of defendant, inter alia, was that statement of account annexed by plaintiff Bank had various defects, which were pointed out in application for leave to defend, therefore the same ought to have been adjudicated upon

Validity

Statement of account furnished by plaintiff Bank had been properly bifurcated in two parts, showing withdrawals by defendant from time of first sanction of finance, and with some deposits as well and entries therein showed markup that had been charged from time to time, and recovery of the same had been made regular intervals

Such statement of account was prepared in accordance with banking practice and procedure, and certified per S. 4 of Bankers' Books Evidence Act, 1891

Challenge to such statement of account by defendant was merely perfunctory in nature and therefore leave to defend had rightly been rejected by Banking Court

Appeal was dismissed, in circumstances.

Contention of defendants, inter alia, was that no valid and effective service in terms of the Financial Institutions (Recovery of Finances) Ordinance, 2001 had been made, and they had been unaware of proceedings before Banking Court also on account of being forcibly dispossessed from their property, due to which they had to settle in another city

Validity

Per S. 9(5) of the said Ordinance, even if service was effected in any one of the modes given therein, same would be deemed valid service, which was done in the present case - Contention of defendants that they had been forcibly dispossessed was not tenable as it was as bounden duty of borrower to furnish information regarding change of his / her abode to the concerned Bank, which obligation the defendants did not fulfil

Suit was therefore validly decreed, ex parte by Banking Court

Appeal was dismissed, in circumstances.

Scope-Defendant impugned order of Banking Court whereby his application for leave to defend was rejected and suit was decreed - Contention of defendant, inter alia, was that statement of account annexed by plaintiff Bank was defective and therefore impugned order was wrongly passed

Validity

Defendant could not point out any specific entry in statement of account which had been either wrongly entered therein or any markup which had been excessively charged and said statement of account was duly certified also

High Court observed that while suit was rightly decreed by Banking Court however, three specific debit entries in statement of account, which were charged by plaintiff Bank after expiry of finance, ought to have been deleted from decretal amount as same were made in disregard to standard banking practice and procedure

High Court modified the decree to extent of said entries

Appeal was partially allowed, accordingly.

Contention of defendants', inter alia, was that substantial questions regarding factum of death of one of the defendants, and forged signatures on mortgage deed, were raised in said applications, which ought to have been adjudicated upon

Validity

Contention regarding death of a defendant was not tenable as no death certificate or other document had been brought on record by defendants to confirm factum of such death of defendant

Registered mortgage deed had been duly executed and objection of defendants denying signatures on the same were perfunctory in nature and did not lead to substantial questions of law and fact in terms of S. 10(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Impugned order was therefore rightly passed by Banking Court

Appeal was dismissed, in circumstances.

Defendants impugned order of Banking Court whereby application for leave to defend of defendants was rejected and suit was decreed

Contention of defendants, inter alia, was that statement of account annexed by plaintiff Bank showed a "brought forward entry" of an amount, which was unaccounted for in documents annexed by Bank, and as such matter ought to have been adjudicated after allowing application to leave to defend

Validity

Record showed mortgage deeds pertaining to past years showing business relations between defendants and banks and during such business relations, certain credit facilities can be safely switched over when fresh sanction of finance was issued while specifying terms and conditions

In such circumstances, said "brought forward entry" was incorporated in statement of accounts by plaintiff Bank and Sanction Advice issued by plaintiff Bank was acknowledged by defendants

Defendants could not now question the very entries in statement of account to which they were beneficiaries, and such statement of account was free of ambiguities

Application for leave to defend was therefore rightly rejected by Banking Court

Appeal was dismissed, accordingly.

Record revealed that statement of account furnished by plaintiff Bank had not been certified per S. 4 of Banker's Books Evidence, 1891, which tantamount to non-compliance with mandate of S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 200

While Banking Court could pass ex parte decree after valid service had been effected, however a heavy duty was cast on Banking Court to have looked at the documents annexed by plaintiff Bank, and statement of account not certified per Banker's Books Evidence, 1891 lost is evidentiary value

High Court set aside ex parte decree of Banking Court and remanded matter to Banking Court

Appeal was allowed, accordingly.

Plaintiff Bank impugned order of Banking Court whereby, after ex parte decree, upon application of defendant for correction of decretal amount, the decretal amount was modified

Contention of plaintiff Bank, inter alia, was that such order was made without jurisdiction in terms of S. 27 of Financial Institutions (Recovery of Finances) Ordinance, 2001

Validity

Per proviso to said S. 27 of the Ordinance, Banking Court could, either on its own accord or upon application of any party and after notice to the opposite side, could correct clerical or typographical mistake in a decree

In the present case, Banking Court, through impugned order rectified its own mistake through correction of decretal amount and same could not be termed to be a review of the ex parte judgment and decree passed by it

No illegality existed in impugned order

Appeal was dismissed, in circumstances.

Plaintiff customer's suit against defendant Bank was rejected by Banking Court under provisions of O. VII, R. 11, C.P.C.

Validity

Through said suit, plaintiff only attempted to reopen a previous case, where suit for recovery had been filed by Bank against the present plaintiff, in which he actively participated and which culminated in issuance of sales certificate for mortgaged property in his name, and such order of Banking Court was never challenged by plaintiff in appeal

Plaintiff, therefore was estopped by his conduct from instituting a recovery suit against defendant Bank and plaint was therefore rightly rejected by Banking Court under O. VII, R. 11, C.P.C.

Appeal was dismissed, in circumstances.

Defendant, public limited company, impugned order of Banking Court, whereby its application for leave to defend was rejected, and suit was decreed in favour of plaintiff Bank

Contention of defendant, inter alia, was that a number of questions of law and fact were involved, which could not be resolved without recording of evidence, and in particular that statement of account was not duly certified as required by law

Validity

Statement of account submitted by plaintiff Bank carried a note at the end of it, which duly certified said statement, and each page of such statement was duly stamped and initialized by concerned officer of plaintiff bank, which met requirements of S. 2(8) of Banker's Books Evidence, 1891

In the present case, renewal and restructuring of finance facility was done, which was normally a concession upon admission of liability on part of customer, and settlement agreement was duly executed between the parties, and in such circumstances, plaintiff Bank was not obliged to bring on record statement of accounts prior to agreement through which restructuring / settlement was made

Defendant had challenged veracity of documents brought on record by plaintiff bank only verbally and without only documentary proof

Defendant had thus not complied with mandatory requirements of S. 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001 and therefore impugned order rejecting leave to defend of defendant was rightly passed

Appeal was dismissed, in circumstances.

Defendant impugned order of Banking Court whereby its application for leave to defend was rejected and suit filed by plaintiff Bank was decreed

Suit was filed by Bank after failure of defendant to adhere to terms of a compromise arrived at between parties after Bank withdrew previous suit with permission to file fresh suit

Contention of defendant was that plaintiff Bank had sold pledged shares without permission of defendant, which was violation of terms of said compromise and such substantial questions of law and fact were raised in application for leave to defend, which was rejected by Banking Court

Validity

Record showed that plaintiff Bank issued notice to defendants seeking repayment and mentioned clause of compromise agreement showing Bank's implied intention to sell pledged shares and another letter was issued by plaintiff Bank after sale of pledged shares

When pledgee elects to exercise power of sale under S. 176 of Contract Act, 1897, then sale of such shares could be made after giving reasonable notice to the pledger and it would depend on facts of each case to determine whether such notice was reasonable

For such notice to be reasonable, it was not necessary that same must contain actual date of sale or time and required only that pledger should be given reasonable time to redeem property pledged and it was not necessary for pledgee to serve notice at time of actual sale

No illegality existed in impugned order

Appeal was dismissed, in circumstances.

Any charges which were penal in consequence, could not be claimed as a result of civil default of breach of finance agreement.

Contention of defendant inter alia, was that plaintiff bank had not annexed proper statement of account and disbursement of finance as claimed by plaintiff Bank was not made, and therefore impugned order was liable to be set aside

Validity

Record revealed that plaintiff bank had not appended documents showing disbursement of amounts to defendant and such failure of plaintiff Bank to append certified statement of account along with other documents relating to grant of finance was non-compliance of S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001

Effect of such non-compliance entailed grant of leave to defend suit to defendant

Defect in non-filing of complete and accurate statement of account with plaint could not be cured subsequently by filing same with replication or with application seeking submission of additional documents

Application for leave to defend if dismissed while relying on a statement of account not filed with plaint or replication, then same would tantamount to infringement of Fundamental Right to Fair Trial and Due Process guaranteed under Arts. 4 & 10A of Constitution

Since mandatory requirement of filing statement of account with plaint was not fulfilled and disbursement of finance facility was not established through any valid document, therefore substantial questions of law and fact arose, and thus application for leave to defend ought to have been granted by Banking Court

Impugned order was set aside, application for leave to defend of defendant was allowed and matter was remanded to Banking Court

Appeal was allowed, accordingly.

Argument that mere filing of documents by plaintiff Bank along with reply to application for leave to defend, would give rise to grant of application for leave to defend was misconceived

Plaintiff Bank had right to file replication, purpose of which was to provide plaintiff opportunity to rebut averments made by defendant in application for leave to defend

Plaintiff could only file this documents along with replication which were either to be filed by defendant with application to leave to defend, or ancillary documents to rebut averments contained in an application for leave to defend.

Branch Manager of a Bank was authorized under S. 9(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001 to institute suit on behalf of a plaintiff Bank.

Question before High Court was whether Banking Court could dismiss suit without first accepting or rejecting application for leave to defend filed by defendant

Held, that Banking Court was empowered to examine the plaint to determine breach of obligation by a financial institution or a borrower before it fixed a date of hearing to decide application for leave to defend and Banking Court could reject or return a plaint by invoking any provision under the C.P.C. before summoning the defendant under S. 9(5) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (Ordinance) or before fixing a specific date of hearing for application for leave to defend

Banking Court, however, once it examined plaint, and was satisfied that same was in order as per the requirements of the Ordinance, and had issued summons to defendant pursuant to which defendant filed application for leave to defend, and a date of hearing of same had been fixed, then Banking Court ought to cease taking any further step under the provisions of C.P.C. without first deciding application for leave to defend in accordance with S. 10 of the Ordinance

Banking Court, in such a case, was therefore duty bound to either grant or reject application for leave to defend in terms of S. 10 of the Ordinance before taking any other step towards progression and continuation of the suit.

Where no amount was payable by borrower / customer or even excess amount had been paid by borrower to bank / financial institution, then Banking Court could pass decree regarding cost of funds subject to offsetting excess amount, if any, which could be determined at stage of execution of such decree.

Plaintiff Financial Institution impugned order of Banking Court whereby its claim on additional lease payments for overdue payments, as provided for in lease agreement, was disallowed

Validity

When cost of suit and cost of funds had been awarded by Banking Court in harmony with S. 3(2) of the Ordinance, then the same adequately protected interest of Financial Institution by reimbursing and compensating it for obstruction of funds

Any additional compensation such as additional lease rentals for overdue payments would amount to penalizing costumers and a default in lease finance contract could not have consequences of overpayment by customers and undue fiscal gain for Financial Institution

Allowing such payments would be contrary to S. 73 or Contract Act, 1872 as sufferer of breach could recover compensation only for loss or damage which naturally arose in usual course of things from such breach

No illegality therefore existed in impugned order

Appeal was dismissed, in circumstances.

Appellant impugned order of Banking Court whereby provisions of O. XII, R. 37, C.P.C. read with S. 51, C.P.C. were invoked to arrest / detain judgment-debtor for satisfaction of decretal amount

Validity

Before passing of any order for arrest/detention of judgment-debtor, finding was required to be recorded by Executing Court that it was satisfied that decree could not be executed by delivery of any property, or by attachment and sale of property/assets

Adopting such coercive measures without due course of law would violate Art. 10A of the Constitution

No mechanical order for detention could be passed and precondition for invoking such powers for arrest were that court should be satisfied that judgment-debtor was likely to leave territorial limits of court to frustrate decree or that he had dishonestly transferred property to avoid decree or that he had means to pay for decree but was neglecting to do so and said preconditions must be reflected on record before adopting such measures, which was not done in the present case

Impugned order was set aside and Banking Court was directed to execute decree through auction of mortgaged property and / or sale of assets of judgment-debtor, with observation that Banking Court could pass fresh order under S. 51, C.P.C. in accordance with law and procedure

Appeal was allowed, accordingly.

Contention of defendant, inter alia, was that application for leave to defend ought to have been granted as precious rights of defendant were involved

Validity

Application for leave to defend, in present case, contained no meaningful ground challenging liability set up in plaint and same did not comply with mandatory requirements of S. 10(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001

Failure to meet such mandatory requirements, it was incumbent on Banking Court to reject such application for leave to defend in terms of S. 10(6) of Financial Institutions (Recovery of Finances) Ordinance, 2001, and pass decree forthwith

No illegality therefore existed in impugned order

Appeal was dismissed, in circumstances.

Objection application filed by objector who claimed to be bona fide buyer of subject property was allowed by Banking Court on ground that said property was not actually mortgaged and objector had validly bought the same before filing of suit for recovery

Validity

Appellant Bank could not show any document on which Bank's lien was marked in record of Excise and Taxation Department and therefore Banking Court in impugned order had rightly concluded that property was not mortgaged with plaintiff Bank and thus auction process could not continue

Appeal was dismissed, in circumstances.

Contention of defendant, inter alia, was that an incomplete statement of account was appended by plaintiff Bank, therefore impugned decree could not have been made

Validity

Record revealed that statement of account appended by plaintiff Bank did not cover entire period of finance facility and in terms of S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001, it was obligatory upon plaintiff Bank to provide complete statement of account and such statement of account should be a self-contained document reflecting period for which markup had been debited and also amount repaid by customer, if any

Impugned order was set aside, and matter was remanded to Banking Court with direction to plaintiff bank to file complete statement of account and for defendants to file leave to defend

Appeal was allowed, accordingly.