Appellant/defendant, through the filing of the present appeal, has called in question judgment and decree dated 23-9-2004, whereby the learned Judge Banking Court, after finding that the appellant failed to file an application for leave to defend the suit, proceeded to pass a decree favouring the respondent, as prayed for.
2. Precisely stated, facts of the case are that the respondent filed the suit for rendition of accounts and declaration with permanent injunction, against the appellant before the learned Judge Banking Court, who issued summons to the appellant, in the manner provided under the law. The summons were served, on 31-5-2003 and the appellant instead of filing an application for leave to defend the suit within a period of 30 days, filed the written statement, on 26-6-2003. The matter remained pending for a considerable period, until on 22-9-2004, the learned counsel for the respondent pointed out that no application for leave to defend the suit has been filed by appellant.
Thereupon the learned Judge Banking Court, after hearing the parties and finding that the appellant failed to file any "PLA", proceeded to decree respondent's suit as prayed for, vide judgment and decree dated 23-9-2004, hence the present appeal.
3. Learned counsel for the appellant, while referring to section 10(3) of the Financial Institutions (Recovery of Finances) Ordinance No.XLV1 of 2001 (hereinafter referred to as Ordinance, 2001), has submitted that the appellant filed the written statement, therefore, there was sufficient compliance of the said provision of law, which states that the application for leave to defend shall be in the form of written statement. He has added that as appellant's written statement, which was filed within a period of 30 days, was entertained by the learned Banking Court, thus, the same could be treated as the application for leave to defend the suit and as such the respondent's suit could not be decreed. Conversely, the learned counsel for the respondent states that the appellant failed to file the application seeking leave to defend the suit, as required under section 10 of Ordinance, 2001.
He has added that no application for leave to defend was filed, therefore, no defence was offered by the appellant and the learned Banking Court has rightly decreed the suit. He has relied upon Citibank v. Tariq 'Mohsin Siddiqi and others PLD 1999 Karachi 196: Allied Bank of Pakistan Ltd. through Iftikhar-ul-Haq and Khalid Ishaq v. Mohib Fabric Industries Ltd. through Chief Executive 2004 CLD 716; Bankers Equity Limited through Principal Law Officer and 5 others v. Messrs Bentonite Pakistan Limited and 7 others 2003 CLD 931 and Messrs Huffaz Seamless Pipe Industries Ltd. Karachi v. Allied Bank of Pakistan Limited, Karachi 2001 CLC 713.
4. We have examined the summoned record, which has been received today, and find that on presentation of the plaint by the respondent, the learned Banking Court issued summons to the appellant, as provided under section 9(5) of Ordinance, 2001 through registered post acknowledgement due and through courier service. Pursuant thereto, the appellant appeared in the Court, but instead of filing the application for leave to defend the suit, on 26-6-2003, filed the written statement. Perusal of the order sheet shows that even subsequently, no leave application was filed. We find from the order dated 7-7-2004, that the learned Banking Court, while restoring the suit of, the respondent, directed the appellant to file PLA in accordance with law, yet it chooses not to file any such application, till on 22-9-2004, the respondent raised the objection qua the non- filing of the leave application. Admittedly the appellant throughout the proceedings did not file any application seeking leave to defend the suit. The appellant was not granted leave to defend the suit at any stage, yet it did file the written statement, which under the law, could only be filed, when a defendant is granted leave to defend the suit. Section 10(1) of Ordinance, 2001 provides that a defendant shall not be entitled to defend the suit unless he obtains from the Banking Court, leave to defend the suit 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. Section 10(8) of Ordinance, 2001 envisages that the Banking Court shall grant the defendant leave to defend the suit, if on consideration of the contents of the plaint, the application for leave to defend and reply thereto, it is of the view that substantial questions of law or fact have been raised in respect of which evidence needs to be recorded. According to section 10(10) of Ordinance, 2001, where the application for leave to defend is accepted, the Banking Court shall treat the application as a written statement and shall frame issues.
Section 13 of Ordinance, 2001, further provides that a suit in which leave to defend has been granted shall be disposed of within 90 days from the day on which leave was granted.
It is evident from the joint reading of the aforesaid provisions of law that after the service of the defendant has been effected, as provided under the law, he shall not be entitled to defend the suit unless he obtains from the Court leave to defend the suit through filing an application, as provided under section 10 of Ordinance, 2001. It is only in that eventuality, when the application for leave to defend is accepted, that his such application shall be treated as written statement. It flows therefrom that 'when a defendant is served, he is only required to file the application for leave to defend the suit within the prescribed period and he is not permitted to submit the written statement as of right. It has nowhere been provided under the said special law that the defendant, after the service, is required to straightaway file the written statement. In the present case, admittedly, after the appellant was served, it did not file any application seeking leave to defend the suit and it submitted the written statement, may be within a period of 30 days, which was erroneously entertained by the learned Banking Court in complete oblivion of the provisions of Ordinance, 2001. In view of the provisions of law, the written statement, filed by the appellant, could not be entertained and considered as leave application, it was not entitled for the grant of leave to defend the suit and the learned Banking Court rightly refused to grant appellant leave to defend the suit, thus we are inclined to maintain the impugned judgment to that extent.
5. Now coming to another aspect of the case. In the present set of circumstances, when the appellant failed to file the requisite application for the grant of leave to defend, the suit within the prescribed period, the learned Banking Court, instead of receiving the written statement, ought to have called upon the respondent to prove his case by producing evidence, as in the suit for declaration and permanent injunction, decree could not have been passed straightaway, as the claim of declaration cannot be equated with the suit founded on Negotiable Instruments. When the appellant failed to obtain leave to defend in respondent's suit of declaration and permanent injunction, the learned Banking Court was legally obliged to decide said suit after calling upon the respondent to produce evidence in support of its claim. The learned Banking Court has completely deviated from the procedure, provided under the special statute, completely forgetting that the Banking Court, being the creature of the statute, is bound by the provisions of that statute, thus, we are persuaded to set aside the other portion of the judgment.
6. In the above perspective, we have examined the impugned judgment and find that the learned Judge Banking Court has rightly declined to treat appellant's written statement as the application for leave to appear and defend the suit, thus that part of judgment and decree is maintained.
However, latter portion of the judgment, whereby the learned Banking Court straight decreed respondent's suit is not in accordance with law on the subject, therefore, the same is not sustainable in law. Under the present set of circumstances, the suit could not have been decreed forthwith after refusal of leave to defend the suit to the appellant, as it was not based on negotiable instruments.
7. For the foregoing reasons, the instant appeal is decided in the following terms:--
(i) The appeal is partly allowed.
(ii) Judgment and decree dated 23-9-2004, to the extent of decreeing respondent's suit, is set aside.
(iii) Rest of the judgment and decree, declining to treat appellant's written statement as application for leave to defend the suit and refusal of leave to defend the suit to the appellant, is maintained.
(iv) Resultantly respondent's suit titled "Sehrish Textile Mills Ltd. v. Askari Commercial Bank Ltd." shall be deemed to be pending before the learned Judge Banking Court, Faisalabad, who shall decide the same, afresh, after calling upon the respondent/plaintiff to produce evidence in support of its claim and also providing adequate opportunity to the appellant to cross-examine plaintiffs witnesses and to raise objections regarding admissibility and authenticity of the documents, if any. produced by the plaintiff.
(v) The appellant shall not be allowed to lead their evidence or to produce any document. as it failed to obtain leave to defend the suit.
(vi) No order as to costs.