' MIAN HAMID FAROOQ, J.---This single judgment shall decide the present appeal (R.F.A. No,234 of 2005) and the connected appeal (R.F.A. No,235 of 2005), as common questions of law and facts are involved in both the appeals they are between the same parties and have arisen out of to single judgment.
2. Both the aforenoted appeals, filed under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, proceed against the single judgment dated 16-3-2005, whereby the learned Judge Banking Court dismissed appellant's suit for recovery and decreed declaratory suit, filed by the respondent.
3. Facts of the case, in brief, are that on 5-12-1992, the appellant-Bank filed the suit for recovery of Rs,14,71,756, (ZTBL v. Syed Furrakh Hussain Shah), relating to the amount, reportedly, availed by the respondent from the appellant-Bank in different loan accounts during the year 1988-89, before the then Banking Tribunal (since defunct). In response to the show-cause notice, the respondent, on 20-1-1993, filed its reply, which was, later on, treated as an application for grant of leave to defend the suit. Subsequently, on 11-11-1999, the respondent filed the declaratory suit (Syed Furrukh Hussain Shah v. ZTBL), against the appellant-Bank, before the learned Banking Court pleading therein, that pursuant to the announcement of incentive scheme by the Government, the appellant-Bank wrote a letter to him to pay a sum of Rs,1,49,493 in final settlement of the account and as the said amount was paid, therefore, his account stood settled/closed. The appellant-Bank, on 12-1-2001, filed the application seeking leave to defend the suit. Both the aforenoted suits were pending before the learned Banking Court, Faisalabad, who decided the same through the single judgment dated 16- 3-2005, in the following terms:-
(i) In appellant's suit for recovery (ZTBL v. Syed Furrukh Hussain Shah) application for leave to defend the suit, filed by the respondent, was accepted and bank's recovery suit was dismissed.
(ii) In the suit for declaration and permanent injunction (Syed Furrukh Hussain Shah v. ZTBL) filed by the respondent, appellant's bank leave application was rejected and the declaratory suit was decreed with costs.
(iii) Bank was directed to redeem the mortgaged property and return the pass book to the respondent within a period of thirty days.
' Hence the present two appeals.
3-A. Learned counsel for the appellant has contended that although initially appellant-Bank addressed a communication to the respondent requiring him to pay a sum of Rs,1,49,493, yet upon an audit objection that the case of the respondent does not fall within that category, the said letter was recalled/withdrawn. He has further submitted that the learned Banking Court has violated the procedure, provided under Financial Institutions (Recovery of Finances) Ordinance, 2001, which renders the impugned judgment and decree as invalid and without jurisdiction. He has added that after the acceptance of respondent's leave application, appellant's suit could not have straightaway been dismissed and at the maximum the respondent was entitled to the grant of leave to defend the suit; similarly, in case of rejection of appellant's leave application, declaratory suit of the respondent could not have been decreed. Conversely, the learned counsel for the respondent has submitted that the case of the respondent falls within the terms of the incentive scheme, introduced by the Government; the appellant-Bank issued letter intimating the respondent to pay a sum of Rs,1,49,493, under the incentive scheme, and that after the payment of the said amount, the appellant was estopped to recall its letter. He has added that the impugned judgment does not call for any interference by this Court. He has relied upon the judgments reported as Agricultural Development Bank of Pakistan through Manager v. Malik Iftikhar Ahmed 2002 CLD 1280 and National Bank of Pakistan v. Messrs PAKSACO Limited 2005 CLC 422.
3-B.We have heard the learned counsel and examined the summoned record. Firstly coming to the present appeal. As noted above, in appellant's suit for recovery, respondent's leave application was accepted. Section 10(10) of the Ordinance XLVI of 2001: Provides that where application for leave to defend is accepted the Banking Court shall treat the application as a written statement, shall frame the issues relating to the substantial questions of law or fact and fix a date for recording of evidence and dispose of the suit. In the instant case, the learned Banking Court, after acceptance of respondent's leave application, straightaway, dismissed appellant's suit in complete derogation of the provision of section 10(10) of the said Ordinance. Under the law, the learned Banking Court was obliged to decide respondent's leave application on its own merits before embarking upon the issues involved in the suit. If the learned Banking Court was of the view that substantial questions of law and facts were raised by the respondent, at best leave to defend could have been granted to the respondent, but in no way at that point of time appellant's suit could have been dismissed.
Placing the facts in appellant's suit fo - recovery in juxtaposition with the provision of section 10(10) of Ordinance XLVI of 2001, it is evident that the learned Banking Court did not adopt the procedure as prescribed in the statute and has, in fact, gone outside the scope of the said provision of law.
Even if the learned Judge was persuaded to accept respondent's leave application, he, instead of straightaway dismissing appellant's suit, in obedience to the provision of section 10(10) of Ordinance, should have treated his leave application as written statement, framed the issues, recorded the evidence and thereafter decided the suit, of course in accordance with law. We are of the view that the approach of the learned Banking Court in dismissing appellant's suit is perfunctory and casual, as he has completely bypassed the provision of section 10(10) of the Ordinance and has evolved its own procedure. The learned Judge Banking Court has deviated from the procedure provided under the law, short circuited the matter and non-suited the appellant in complete oblivion of the law on the subject. It is pertinent to mention here that the Banking Courts, which are the creature of the statute, are bound by the provisions and procedure provided under that particular statute. The learned Judge Banking Court, in violation of the procedure provided under section 10(10) has dismissed appellant's suit, which judgment cannot be upheld. In arriving the aforesaid conclusions, we find support from the judgment reported as Lt.- Col. (Retd.) Mahmood Akhtar v. Bank of Punjab through Manager 2004 CLD 821, wherein it has, inter alia been held that "confronted with the above, learned counsel for the respondent has not been able to show as to under what law, the suit had been decreed, when after the grant of leave to the respondent-defendant, it was obligatory upon the Court to have framed the issues and permitted the parties to produce evidence".
' In the above perspective, we are not inclined to maintain the judgment and decree, whereby appellant's suit was dismissed.
4. Now turning to the connected appeal (R.F.A. No,235 of 2005). As noted above, the learned Judge Banking Court, in respondent's suit for declaration and permanent injunction, after rejecting appellant's application for leave to defend the suit, decreed respondent's suit. Even the said portion of the judgment is not sustainable in law. Learned counsel for the appellant is right in submitting that after rejecting Bank's application seeking leave to defend the suit, respondent's declaratory suit could not have been decreed. To our mind, even after rejecting respondent's leave application 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 for declaration and permanent injunction, the learned Judge Banking Court was legally obliged to decide the said suit after calling upon the respondent to produce evidence in support of his claim.
In this suit too, the learned Judge Banking Court has deviated from the procedure provided under the special statute. In such types of suit, even if a defendant failed to file the application for leave to defend the suit or its application was dismissed and the leave was refused, the learned Judge Banking Court was legally obliged to decide the suit after recording plaintiffs evidence in support of his claim, thereby providing adequate opportunity to a defendant to cross-examine his witnesses.
In such-like cases, even if 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. If any case-law is needed, judgment 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 can be referred.
' In this case, if the Banking Court was of the view that the appellant-Bank is not entitled for leave to defend the suit, then after rejecting its application the learned Banking Court should have decided the matter, after calling upon the respondent to prove his case.
' In the above backdrop, the other portion of the judgment and decree, which is the subject-matter of the connected appeal, cannot be maintained.
5. There is another aspect of the case. The learned Banking Court, while accepting respondent's application for leave to defend the suit in appellant's suit and rejecting appellant's leave application in respondent's suit, failed to give reasons. The learned Judge Banking Court, while deciding aforenoted two leave applications, was obliged in law to give at least some reasons, on the basis of which it could be ascertained as to upon which material on record, both the applications have been decided. The learned Judge Banking Court abruptly decided those applications, which are not supported by reasons, thus, the impugned judgments are bad in law on this count too.
6. As regards the judgment, relied upon by the learned Judge Banking Court, suffice it to say that the same is not applicable In the facts and circumstances of the present case, thus, the same is of no avail to the respondent.
7. Upshot of the above discussion is that both the appeals are decided in the following terms:--
(i) Both the appeals are allowed and single judgment it and both the decrees are set aside.
(ii) Both the suits titled (ZTBL v. Syed Furrukh riussain Shah) and (Syed Furrukh Hussain Shah v. ZI'BL) and the leave applications, filed by the respective parties, shall be deemed to be pending before the learned Judge Banking Court, Faisalabad, who shall, firstly, decide the leave applications and then the suits, after hearing the parties and of course in accordance with law.
(iii) No order as to costs.
Case re a tided.