MIAN HAMID FAROOQ, J.--Appellant, through the filing of the present first appeal, has called in question judgment and decree dated 15-7-2004, whereby the learned Judge Banking Court decreed respondent No.2's suit for declaration and permanent injunction, as prayed for.
2. Respondent No.2/plaintiff filed the suit for declaration with permanent injunction, against the appellant and respondent-bank, seeking a decree of declaration "that the liability of the plaintiff does not exceed the amount as per agreement with mark-up and the excess facility if any availed by the defendant No.2 is the liability of defendant No.2 only as per the agreement annexure-A. The defendants be directed to receive agreed amount from the plaintiff and to return the property documents to the plaintiff. They be permanently restrained from auctioning, selling, disposing of or alienating the suit property in any manner whatsoever," before the Banking Court. Both the defendants did not file any application seeking leave to defend the suit. The learned Banking Court, after finding that the defendants failed to file application for leave to defend the suit, proceeded to decree plaintiff's suit as prayed for, vide impugned judgment and decree dated 15-7-2004, hence the present appeal.
3. Learned counsel for the appellant has submitted that the suit was incompetent, therefore, the same could not have been decreed. He has further submitted that the impugned order is non- speaking order and devoid of reasons, hence not sustainable. Respondent No.1 was proceeded ex parte, vide order dated 14-2-2005. Learned counsel for the respondent No.2, while supporting the impugned judgment, has submitted that on the basis of same agreement, the appellant has also filed the suit before the Civil Courts, which is still pending.
4. Admittedly, the appellant as well as respondent No.1, both defendants in the suit, failed to file any application seeking leave to defend the suit, as contemplated under section 10 of Ordinance XLVI of 2001. Despite that, the learned Banking Court erroneously decreed respondent No. l's suit "as prayed for", in complete oblivion of the fact that in the suit for declaration and permanent injunction, a decree could not have been passed straightaway, as the claim for declaration cannot be equated with a suit founded on a negotiable instrument. To our mind, even if appellant failed to file the application for leave to defend the suit, the learned Banking Court was legally obliged to decide the suit after calling upon the plaintiff to produce evidence in support of his claim. It may be noted that in such-like cases even in the event a defendant does not appear before the learned Banking Court or he is not granted leave, the Banking Court is not absolved of its duty to apply its mind to the facts and circumstances of each case. The similar question was decided by the Honourable Supreme Court of Pakistan in the case reported as Messrs Qureshi Salt and Spices Industries, Khushab and another v. Muslim Commercial Bank Limited, Karachi through President and 3 others 1999 SCM R 2353. It will be appropriate to reproduce para.11 of the judgment, which is apt to the facts and circumstances of the case and really clinches the matter, which reads as follow:-- "We would not like to express our view on the question as to, whether the appellant's claim for damages for the above sum of Rs.4,08,53,000 can be said to have arisen out of a loan. However, we would observe that the above question needs examination. The learned Judge in Chambers acting as Special Court could not have passed a decree straightaway as the present claim for damages cannot be equated with a suit founded on a negotiable instrument. In this behalf reference may be made to the case of Haji Ali Khan & Company, Abbottabad and 8 others v. Messrs Allied Bank of Pakistan Limited, Abbottabad PLD 1995 SC 362 relied upon by Raja Muhammad Akram, learned Senior Advocate Supreme Court for the respondents, wherein while construing Rules 3 and 4, Order XXXVII, C.P.C. this Court held as under:-- - "(10) The ratio decidendi of the above-referred cases seems to be that if a defendant fails to appear or fails to obtain leave to defend in response to a summons served in Form No.4 provided in Appendix B to the C.P.C. or fails to fulfil the condition on which leave was granted where the Court refuses to grant leave, the Court is to pass a decree. It may further be observed that in sub-rule (2) of Rule 2, C.P.C., it has been provided that if a defendant fails to appear or defaults in obtaining leave, the allegations in the plaint shall be deemed to be admitted and the plaintiff shall be entitled to a decree, but no such consequences are provided for in rule 3 of the above Order in a case where the Court refuses to grant leave or the defendant fails to fulfil the condition on which leave was granted. In our view, notwithstanding the above omission in Rule 3, the effect of refusal of the Court to grant leave or failure on the part of the defendant to comply with the condition of the leave, will be the same i.e. the defendant shall not be entitled to defend the suit on any ground and the Court would pass a decree' in favour of the plaintiff. However, this does not necessarily mean that the Court is not required to apply its mind to the facts and the documents before it. Every Court is required to apply its mind before passing any order or judgment notwithstanding the factum that no person has appeared before it to oppose such an order or that the person who wanted to oppose was not allowed to oppose because he failed to fulfil the requirements of law."
Placing the principle of law laid down in the aforenoted case in juxtaposition with the facts of the present case, we are of the view that the impugned judgment is not sustainable in law and deserves to be set aside.
5. Upshot of the above discussion is that the present C appeal is allowed and the impugned judgment and decree dated 15-7-2004 is set aside with no order as to costs. Resultantly, respondent No.2's suit titled "Syed Mohtashim Raza Bokhari v. Union Bank Limited" shall be deemed to be pending before the learned Judge Banking Court, which shall decide the same, afresh, after calling upon the plaintiff/respondent No.2 to produce evidence in support of his claim. Needless to add that the defendants in the suit shall be entitled to cross- examine plaintiff's witnesses, however, they will not be allowed to lead their own evidence, as they failed to seek leave to defend the suit.