' MUHAMMAD GHANI, J.---This appeal is directed against the judgment and decree, dated 9-9- 1998 of the learned Judge, Banking Court No,II, Lahore, whereby he rejected the plaint in the suit filed by the appellant, on the ground of lack of cause of action.
2. Briefly stated, the facts of the case are that Zubair Muhammad, appellant, filed a suit against United Bank Limited, respondent, seeking specific performance of agreement and, in the alternative, for recovery of Rs.56,82,000 as compensatory damages, by pleading that he had applied to the respondent for loan for purchase of three Chassis of Mercedes Buses under the Prime Minister's Scheme for Private Transport; that a loan of Rs.29,98,026 was sanctioned on 3-11- 1992; that according to the Sanction Advice, he was to contribute 10% whereas 90% of the total price of the three Chassis of Mercedes Buses, expenses on fabrication of bodies of the buses, and insurance charges were to be borne by the respondent-Bank, recoverable as a loan from the appellant in terms of the Sanction Advice; that in view of escalation in prices, the loan amount was subsequently enhanced to Rs. 32,55,900 on 28-6-1993; that in terms of the agreement between the parties, the respondent-Bank was liable to pay at the rate of Rs.3,00,000 per unit towards fabrication of bodies of the buses, but the Bank had failed to honour its commitment, therefore, the appellant had to raise funds by borrowing Rs.6,00,000 from an individual, named Malik Muhammad Aslam, at an exorbitant rate of 22% interest per mensem. The break-up of the claim, as given in paragraph 10 of the plaint, was as follows:--
(i) Average monthly income: Rs.1,50,000 per bus for 11 per bus @ months
(ii) Loan from Malik Muhammad Aslam Rs.6,00,000
(iii) Interest on Item No. (ii) above Rs.1,32,000 Total: Rs.56,82,000.00
3. The suit was originally filed on 7-7-1994 before the learned Special Judge (Banking), Lahore, plaint whereof was returned on 12-6-1995 on the ground of lack of jurisdiction. It was then filed in the Civil Court at Lahore on 14-6-1995. It was treated as an ordinary suit and the defendant- respondent was summoned through summons issued under Order V, rule 1, C.P.C. When appeared, the defendant-respondent was called upon to file written statement, which was, in fact, filed on 18th of April 1996. Besides taking objection that the plaintiff-appellant had no cause of action for the suit, it was pleaded that the action begun was a mere contrivance to blackmail the Bank and to avoid payment of instalments to liquidate his liability. It was further pleaded that buses bearing Registration Nos.LPT-585, LPT-909 and LPT-2266 were plying on the route from Lahore to Peshawar and back, and that the plaintiff-appellant was minting money every day. During pendency of the suit, to be exact on the 3rd of October, 1996, an application (dated 12-9-1996) under Order VII, rule 11, C.P.C. Was filed by the defendant-respondent in the Court of the learned Civil Judge, then seized of the suit, seeking rejection of the plaint, to which reply was filed by the plaintiff-appellant on 18- 12-1996. The matter remained pending in the' Civil Court, without any headway till 3rd of June, 1997, when an application under section 9 read with section 151, C.P.C., was filed by the plaintiff- appellant, seeking transfer of the suit from the Civil Court to the Banking Court on the ground that in view of the enactment of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 with effect from 2nd February, 1997, only the Banking Court, constituted under the said Act, had the jurisdiction to entertain and adjudicate upon the suit. The record shows that the application remained pending till 22nd of October, 1997, when the learned District Judge, Lahore sent the file of the suit to the Banking Court, Lahore. The file was received by the learned Judge, Banking Court No,II, Lahore on 25th of October, 1997, when he directed issuance of notices Pervi to both the parties and their counsel for 2-1-1998. On the date last mentioned, learned counsel for the defendant-respondent requested the Court to treat the application under Order VII, rule 11, C.P.C., as an application for leave to defend the suit. The case was set down for arguments on the said request for 21-2-1998. Though there is no specific order for treating the said application as one for leave to defend the suit but, as will be shown presently, the learned Judge, Banking Court, did treat the same as one for leave to defend the suit. Finally, after hearing the arguments of the learned counsel for the parties, the learned trial Judge vide his impugned judgment and decree, dated 9- 9-1998, rejected the plaint for lack of cause of action, which decision has given rise to the instant appeal.
4. Learned counsel for the appellant contended that the impugned judgment and decree, dated 9- 9-1998, are patently illegal inasmuch as the plaint could not be rejected under Order VII, rule 11, C.P.C., in the absence of any application by the defendant-respondent for leave to appear and defend the suit. In support of his submissions, he relied on subsection (4) of section 9 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (No,XV) of 1997, which reads as follows:- "(4) In any case in which the summons has been served on the defendant as provided for in subsection (3) the defendant shall not be entitled to defend the suit unless he obtains leave from the Banking Court as hereinafter provided so to defend the same; and, in default of his doing so, the allegations of fact in the plaint shall be deemed to be admitted and the Banking Court may pass a decree in favour of the plaintiff on the basis thereof or such other material as the Court may require in the interest of justice."
' Learned counsel for the appellant also relied on Messrs United Distributors Pakistan Limited v.
Ahmad Zarie Services and another 1997 MLD 1835 wherein it was held that in a suit based upon a negotiable instrument in which summons has been issued in Form No,4, Appendix 'B', C.P.C., the defendant is not entitled to appear and defend the suit, as a matter of course, unless he obtains leave from the Court to appear and defend it. It was further observed that till such time as leave to defend is granted, the defendant cannot file even interlocutory applications. Reference was also made to the following observations in Messrs Platinum Insurance Company through Chief Executive v. Messrs Highways Bridge, Contractor International (Pvt.) Ltd. And another 1997 MLD 2394:-- "It was then vehemently urged that the suit as framed is not maintainable and liable to dismissal but I would refrain from expressing any opinion as this is not a proper stage for adjudicating upon this controversy. Needless to say in the absence of grant of leave to defend the suit defendants are not entitled to raise such issue at this premature stage of the suit. They would be at liberty to agitate all grounds and contentions in their written statement after they are granted leave to defend the suit. At the moment, they are out of Court and not entitled to question the maintainability of suit on factual grounds, which is otherwise not barred."
' In support of his submission, learned counsel also cited Sarfraz Ahmed Malik v. National Bank of Pakistan through Branch Manager 2002 CLD 1422 wherein the dismissal of the suit, without calling upon the defendant to file an application seeking leave to appear and defend the suit, was not approved.
5. While advancing the above argument, learned counsel for the appellant has lost sight of the factual background of this case as well as the provisions contained in subsection (7) of section 7 and subsection (3) of section 9 of the Act. As mentioned above, the suit was originally filed before the learned Judge (Banking), Lahore, who returned the plaint on the ground of lack of jurisdiction whereafter the suit was filed in the Civil Court which treated the same as an ordinary suit for specific performance of agreement, and, in the alternative, for compensatory damages, and called upon the defendant-respondent to file written statement. In fact, it was after the -written statement had been filed that the defendant-respondent filed the application under Order VII, rule 11, C.P.C., seeking rejection of the plaint. The suit was at the stage of arguments on the said application when it stood transferred to the Banking Court, Lahore, by operation of law, in view of the provisions contained in subsection (6) of section 7 of the Act. In subsection (7) of section 7 of the Act, it was, however, laid down as follows:-- "(7) In respect of proceedings transferred to a Banking Court under subsection (6) the Banking Court shall proceed from the stage which the proceedings had reached immediately prior to the transfer and shall not be bound to recall and rehear any witness and may act on the evidence already recorded or produced before the Court or Tribunal from which the proceedings were transferred." (Emphasis has been supplied by us.)
' In the absence of any provision in the Act that upon transfer of a suit to the Banking Court, fresh summons in Form No,4, Appendix 'B', C.P.C., was to be issued, or that the defendant could not defend the suit unless he had filed an application in that behalf and had obtained leave of the Court, the afore-quoted express provisions of subsection (7) of section 7 of the Act were applicable, and the Banking Court was well within its right to have decided the application under Order VII, rule 11, C.P.C., even without treating the same as an application for leave to appear and defend the suit because the stage for issuing summons in Form 4, Appendix `B', C.P.C., was over long ago, and written statement had also been filed by the defendant. Be that as it may, the learned Judge, Banking Court had, in fact, treated the application under Order VII, rule 11, C.P.C., as one for leave to defend the suit as is apparent from the following statement in the order, dated 15th of April, 1998:-- "For arguments on the application for leave to defend the suit, therefore, now to come up on 22-5- 1998 in the presence of proper person."
' Therefore, the objection of the learned counsel for the appellant is bereft of merit.
6. There is yet another important aspect of the matter. Subsection (4) of section 9 of the Act, which is the entire foundation of the argument of the learned counsel, starts with the rider: "In any case in which the summons has been served on the defendant as provided for in subsection (3) ****" ' and in subsection (3) of section 9 it was unequivocally laid down inter alia as follows:-- "(3) On a plaint being presented to the Banking Court a summons in Form No,4 in Appendix TV to the Code of Civil Procedure (Act V of 1908), or in such other form as may, from time to time, be prescribed by rules, shall be served on the defendant*"."
' It is not the case of the appellant that summons in Form No,4 in Appendix B' to the Code of Civil Procedure had been served on the defendant-respondent. Whereas by means of summons in Form No,4 the defendant is told that he is to obtain leave from the Court within the period specified in the summons, and his failure to do so would entail severe consequences inasmuch as the plaintiff will, in that event, become entitled to the decree, but in the case of ordinary summons served under Order V, rule 1, C.P.C., the defendant is required to file written statement without first undergoing the rigours of obtaining leave to appear and defend the suit. As mentioned above, the defendant-respondent in the instant case had been served with ordinary summons. Therefore, we are of the view that the provisions of subsection (4) would not be attracted since the defendant- respondent had not been served in accordance with the provisions of subsection (3) of section 9.
Similarly, the precedent cases cited at the Bar are distinguishable on facts. With advantage, we may refer to Mst. Bilqees Fatima v. Abdul Razzaq PLD 1986 Karachi 444, where though the suit was under Order XXXVII, C.P.C., but ordinary summons had been issued to the defendant and in pursuance thereof written statement was filed. In the circumstances, the question arose whether the defendant could be required to file application under Order XXXVII, rule 3, C.P.C., for leave to appear and defend the suit. It was held as follows:-- "Order )(XXVII provides summary procedure for suits based on bills of exchange, Hundis or promissory notes, Order XXXVII, rule 2 provides that all such suits are to be instituted by presenting a plaint in the prescribed form. But no form for the plaint has been prescribed. Reference can be made to Habib Bank Ltd. v. Kayece Corporation Karachi PLD 1980 Karachi 143. This rule further provides that the summons shall be in Form No,4 in Appendix 'B' or in any other prescribed manner.
The Form No,4 informs the defendant to obtain leave from the Court within ten days from the service thereof, to appear and defend the. Suit and in default the plaintiff will be entitled to obtain a decree. The form of summons issued under Order XXXVII, rule 2(1) is completely different from the ordinary summons issued under Order V, rule 1, C.P.C. This makes a difference as by the summons issued under Order XXXVII, rule 1 the defendant is not required to file written statement but asked to obtain leave to appear and defend the suit within the prescribed time. He is further warned of the consequences which may follow in case of default. Order XXXVII, rule 2 provides that where the plaint and summons are in the prescribed form the defendant will not be allowed to appear and defend the suit unless leave to appear and defend is obtained from the Court. Further that in default the averments made in the plaint shall be deemed to be admitted and the plaintiff shall be entitled to a decree. This clearly follows that unless the summons is in the prescribed form the question of seeking leave to appear and defend does not arise. As Order )(XXVII, rule 2 provides a particular mode of summons and penalizes the defendant for its noncompliance, it has to be treated as mandatory and should strictly be complied with. In the present case, summons was issued in the form required by Order V, C.P.C., therefore, although the suit was filed under Order XXXVII, the summons was not issued as provided by Order )(XXVII, rule 2, the defendant could not be required to seek leave to appear and defend the suit."
' The spirit behind subsection (3) of section 9 is similar to that of Order XXXVII, rule 1, C.P.C. And, therefore, the ratio decidendi of the precedent case, referred to above, is fully applicable to the instant case. In this view of the matter also, the contention of the learned counsel for the appellant is devoid of force.
7. The next, rather primary question, that arises for consideration in this case is whether the appellant who was undeniably a borrower, had any cause of action to institute the suit against the respondent-Bank. Subsection (1) of section 9 of the Act of 1997 reads as follows:-- "9 (1) Where a borrower or a customer of a Banking Company commits a default in fulfilling any obligation with regard to any loan or finance the banking company or, as the case may be, the borrower or customer, may institute a suit in the Banking Court by presenting a plaint duly supported by a statement of account which shall be verified on oath in the case of a Banking Company by the Branch Manager or such other officer as the Board of Directors of a banking company may authorize in this behalf. Copies of the plaint shall also be filed along therewith in sufficient numbers so that there is one copy for each defendant and one extra copy."
' According to the plain reading of the above provision, a borrower or a customer could institute a suit against a banking company only if there was a default in fulfilling any obligation with regard to any loan or finance. A perusal of the photostatic copy of the Sanction Advice, dated 28-6-1993 filed by the plaintiff-appellant himself with the plaint, shows that originally a loan of Rs.29,98,026 was sanctioned in favour of the appellant on 3-11-1992 which was, later on, enhanced to Rs.32,55,900.
The letter dated 22-8-1993, issued by the Circle Executive of the respondent-Bank which was the basis and the anchor-sheet of the suit of the appellant-plaintiff reads as follows:-- "A transport loan limit of Rs.32,55,900 was approved by P.H.Q. For purchase of 3 Mercedes buses which included the cost of fabrication of body @ Rs.3,00,000 per vehicle. The finance against Chassis of 3 Mercedes Units have already been disbursed. Now an amount of Rs.9,00,000 has to be released in two instalments i.e. Rs.4,50,000 immediately and Rs.4,50,000 at the time of completion of fabrication of body. Please obtain permission of the competent authority." (Emphasis has been supplied by us.)
' Learned counsel for the appellant construed this letter to mean that the Bank had undertaken to pay Rs.9,00,000 towards cost of fabrication of bodies of three buses in addition to the loan facility of Rs.32,55,900 and that since upon demand it had failed to pay the said amount to the plaintiff- appellant, the defendant-Bank was in breach of the contract and, therefore, the plaintiff had the cause of action to institute the suit. We are unable to subscribe to this view, because it was unmistakably mentioned in the afore-quoted letter that the loan limit of Rs. 32,55,900 was inclusive of cost of fabrication of bodies of the three buses. It is not the case of the appellant that the Bank had, in any way failed or faltered, in releasing payment of the sanctioned amount of loan of Rs.32,55,900. In fact, in paragraph 2 of the plaint of the suit filed by the appellant, he himself had pleaded in the following terms:-- "That in view of escalation in the prices of vehicles, enhanced loan was subsequently sanctioned to the tune of Rs.32,55,900. Acting upon the instructions of the Government and terms and conditions of the loan agreement, the plaintiff duly raised the 10% equity, the said loan amount was released for the purchase of chassis to the dealer and the three chassis of busses were obtained."
(Underlining is ours to supply emphasis.)
' When confronted with this admission, learned counsel for the appellant frankly conceded that the entire amount of Rs.32,55,900 had been disbursed to the appellant. In the circumstances, when the respondent-Bank was not in default of fulfilling any obligation with regard to the loan/finance, the appellant-plaintiff had no cause of action for the instant suit, plaint whereof was rightly rejected by the learned trial Judge. No valid exception can, therefore, be taken to the impugned judgment and decree.
8. For the foregoing reasons, we find no merit in this appeal which is hereby dismissed, with costs throughout.