The respondent-Bank brought a suit for the recovery of an amount of Rs.1,85,08,481.04 against the appellants, who moved an application for the grant of leave to appear and defend, which was dismissed by the learned Banking Court and the suit was decreed in favour of the Bank on 3-5- 1999.
2. The appellants challenged the above judgment and decree through R.F.A. No.282 of 1999, which was dismissed by a Division Bench of this Court vide judgment dated 13-9-2000 and the basic contention of the appellants was noted in the following words:-- "Learned counsel for the appellants has not denied that the loan facilities were availed of by the defendants/appellants. He has, however, pressed into service the principle that where some goods have been pledged to secure the repayment of loan unless the pledgee account for the same, no amount can be recovered from it. In this respect reliance has been placed by the learned counsel on the judgment reported as A.M. Burq and another v. Central-Exchange Bank Ltd. And another (PLD 1966 (W.P) Lahore 1)."
Upon the above, in paragraph No.3 of the judgment, this Court held:-- "On the other hand, what appears to have happened is that the goods after arrival in Pakistan, were placed in the Customs Bonded Warehouse, from where the goods were stolen. These goods never came into possession of the respondent-bank and, as such, the question of pledge having been created does not arise."
Therefore, the plea of the appellants about the pledge of goods was rejected.
3. The appellants challenged the said judgment before the Honourable Supreme Court through a Civil Petition, which was simply withdrawn on 9-6-2001, they also filed review petition (C.M.No.55-C of 2001) before this Court, seeking recall of the judgment in R.F.A. No.282 of 1999 on the ground that the view taken by this Court about the pledged goods is unfounded and is not based upon any material available on record, but again the review application was unconditionally withdrawn by the appellants, as is envisaged by the order dated 29-8-2006. Thereafter, the appellants filed objection in the execution process, initiated by the respondent-Bank for the recovery of the decretal amount, in which they took up the same plea and demanded that until and unless the pledged goods are accounted for etc., the decree cannot be executed. These objections have been dismissed by the Executing Court, vide order dated 13-2-2007, hence this appeal.
4. Learned counsel for the appellants contends that the questions, whether the goods were pledged or not; and the Bank should account for their misappropriation, can only be determined in the process of execution by the Executing Court; he in this behalf, has placed reliance on the judgments reported as Habib Bank Limited v. Orient Rice Mills Ltd. And others (2004 CLD 1289), Messrs Crystal Enterprises and 6 others v. Plantinum Commercial Bank Ltd. And 2 others through General Attorney (2002 CLD 868) and Messrs Polymer International through Sole Proprietor and another v. Messrs Bolan Bank Ltd. Through General Manager (2004 CLD 1637), he further by relying upon section 19 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, has argued that at the, time of seeking the execution of the decree in which the goods are pledged, it is mandatory for the decree-holder to account for those. It is also submitted that the application for leave to appear and defend the suit having been dismissed and the suit decreed without giving the appellants/defendants a chance to defend, would not be akin to a contested decree, therefore, in appeal arising from such decree, the decision given by this Court about the non-pledged of the goods shall not be a bar in the appellants' way to seek the determination and accounting for pledge in the execution process; further that as on account of the refusal of the Banking Court to grant the leave etc., the appellants would be deemed as having not been able to defend the matter, therefore, the decision of this Court against that decree shall be considered as the dismissal of appeal "in limine" and it shall not operate as res judicata against them. However, when confronted if the plea about the pledge of goods was taken by the appellants in their leave application, Kh. Saeed-uz-Zafar, learned counsel for the appellants has very candidly conceded that it was not so raised and for the first time was propounded in the aforementioned R.F.A. But his argument is that even if the plea was .Not taken in the leave application, it could validly be set out in the execution process and decided accordingly, as it, according to him, is a question arising between the parties relating to the satisfaction, execution and discharge of the decree.
5. We have heard the learned counsel for the parties and find no merits in the submissions of the learned counsel for the appellants. The procedure for the adjudication of the cases pertaining to the "finances" between the Banking Company and the customer before the Banking Court is of a special and specific nature, which is quite akin to the summary procedure provided for the adjudication of the suits filed under Order XXXVII, C.P.C. The object of summary procedure of both the laws is to provide efficacious remedy to the plaintiff and avoid prolongation of commercial litigation. In such cases, the defendant is not as a matter of right entitled to appear and defend the cause against him, but if he desires to be heard, he must apply to the Court for the permission to appear and defend. In his leave application, the defendant must disclose all the grounds, which entitle him to such leave, specially in the cases pertaining to the recovery under the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act ()CV of 1997), the law applicable at the relevant time, the leave could only be granted to the defendant if "a serious and bona fide dispute" was raised, which should essentially be spelt out from the specific and clear pleas/grounds taken in the leave application. If any plea was not raised or raised but rejected, it would be impermissible for the Banking Court to grant the leave. As has been conceded by Kh.
Saeed-uz-Zafar, learned counsel for the appellants, the plea about the pledge of goods by the appellants with the respondent-Bank and the misappropriation of such goods by the Bank has not been raised at all. Obviously, such plea which had to be founded on the factual premise at the first stage, could not be allowed to have been raised in appeal, yet when this plea for the first time was taken before this Court, this Court while taking a liberal view in the matter, considered the above and in unambiguous, unequivocal and categorical terms, rejected/the plea.
6. It may be pertinent to mention that in their grounds of appeal, it is not even the case of the appellants that the goods imported with the finance in issue were put in possession of the respondent-Bank so as to create a pledge of such goods in terms of law. The averments of appeal are conspicuously ambiguous and vain in this regard. Be that as it may, the above judgment and decree as mentioned earlier was challenged before the Honourable Supreme Court, but the cause was withdrawn; and application for the review of the said judgment was also unconditionally withdrawn with the legal consequences that the judgment dated 13-9-2000 passed by this Court in R.F.A.No.282 of 1999 attained the finality. We are not much impressed with the ingenuous argument of Kh. Saeed-uz-Zafar, learned counsel for the appellants, that the judgment in the noted R.F.A. Is in the nature of the dismissal of appeal in limine and therefore, it shall not operate as res judicata.
Rather in our view, when a leave application is refused on the pleas raised therein, for all intents and purposes, such pleas are the issues directly and substantially in issue in the suit, which when rejected are the one heard and finally decided by the Court within the meaning of section 11 of the C.P.C., so as to attract res judicata in the subsequent suit. This shall also be true for the pleas which might and ought to have been made grounds of defence or attack in the leave application, but were not so made, shall be deemed to have been a matter directly and substantially in issue, for attracting the rule of 'constructive "res judicata". Therefore, the decrees passed in the suits of the nature mentioned above, for all intents and purposes, shall operate as res judicata in the suits to follow. Besides, it is not well conceived to argue that the dismissal of RFA was in limine, rather from the record of that case it transpires that the parties were heard and the appeal was dismissed as a notice case. Be that as it may, we are of the view that the rule of res judicata is not involved in the present case, rather the question is about the jurisdiction of the Executing Court.
7. In pursuance of answering the above question, it may be held that the proposition of the pledge or otherwise of the goods was a disputed question of fact between the parties, having legal consequences, which should have been raised by the appellants in the leave application, but it was not done; however, when it was propounded for the first time in appeal, which is a continuation of the suit, this plea was rejected on the factual premises and the legal proposition which the appellants raised on the basis of the judgment reported as A.M. Burq and another v. Central Exchange Bank Ltd., and others (PLD 1966 (W.P.) Lahore 1), was not accepted, therefore, this question stood conclusively determined by the Court and it was not within the jurisdiction and the competence of the Executing Court to re-adjudicate, whether the goods were pledged by the appellants with the respondent-Bank or not; and about their misappropriation. At this juncture, we feel expedient to dilate and explain that there are two stages in a litigation. The first, where all the points of controversy, may be legal or factual, inter se the parties passes through the process and phase of judicial determination. It is this stage where the plaintiff of the case mandatorily has to raise all the necessary pleas in order to succeed in the matter. And the defendant is obliged to do the same in defence for defeating the cause of the plaintiff. In the cases pertaining to Order XXXVII, C.P.C. And those under the Special Banking Laws, this stage includes the adjudication of the pleas raised in the leave application of the defence. This can be defined as the "determination stage for resolving the dispute between the parties", which goes up to the forum of appeal etc. Therefore, if the requisite pleas are not raised here, the stage for the determination of the controversy between the parties is passed. The second stage is confined only to the execution of the decree, which means the enforcement of the decree by the process of the Court, so as to enable the decree-holder or the judgment-creditor to recover the fruits of the judgments. At this stage, not only the powers of the Executing Court are subservient to the judgment of the Court, which has determined the dispute between the parties and pronounced its verdict, but the parties are also precluded to raise any controversy, which they failed to propound at the determination stage, or if raised, had failed to succeed in this behalf. Besides, it is settled law that the Executing Court cannot go behind the decree; and undoubtedly, it cannot question the legality or the correctness, of the decree; grant the relief to a party, which is not granted in the judgment and decree and above all to adjudicate upon a controversy, which has already been settled by the Court at the determination stage or in the hierarchy thereto. As has been noted above, despite the fact that the plea of pledge of goods was not raised in the leave application, which is the fundamental lapse and default on part of the appellants, but when set out in the appeal, such plea was rejected through the judgment dated 13- 9-2000, which has attained finality and thereafter, the Executing Court was left with no power at all to enter into the area, whether the goods were pledged or not etc. We are not convinced if the case of the appellants falls within the purview of any of the judgments cited by the learned counsel and mentioned in the preceding paragraph No.4, especially Messrs Crystal Enterprises and 6 others v.
Platinum Commercial Bank Ltd. And 2 others through General Attorney (2002 CLC 868), because from the fact of that case, it is clear that there was no dispute between the parties about the factum of the pledge of goods, and it was only with regard to the misappropriation thereof and thus, the Court held:-- "Such matter could only arise in the execution proceedings, when the collateral security was realized in such proceedings through the sale of the same."
Before parting, it may be observed that we do not find ourselves in agreement with the learned counsel for the appellants that under the provisions of section 19, of the Financial Institutions (Recovery of Finances) Ordinance, 2001, the aforementioned question cannot be dealt with and adjudicated by the Executing Court.
In the light of above, we do not find any merit in this appeal, which is hereby dismissed.