Messrs Omer (Pvt.) Limited (respondent No.1) filed a suit in Banking Court No.I, Lahore, for declaration and permanent injunction against the appellant PASSCO, Saudi Pak Commercial Bank Ltd. (respondent No.2) and Allied Bank of Pakistan Ltd. (not impleaded in this appeal). The said plaintiff in the suit claimed non-encashability of the bank guarantees issued by the respective banks to guarantee its performance to PASSCO i.e. The appellant. Perpetual injunction against invocation by PASSCO and encashment by the banks of the said bank guarantees was also prayed for.
2. Upon service of summons, the suit defendants (including the appellant) respectively filed their applications for leave to defend the suit. The jurisdiction of the Banking Court was also challenged in the applications. The leave applications remained undecided. Instead on 28-2-2006 the learned counsel for the-respondent No.1 (the plaintiff) conceding to the objection of the defendants stated that the learned Banking Court had no jurisdiction to entertain the suit. The learned Judge, Banking Court thereupon returned the plaint to respondent Nal i.e. The plaintiff for its presentation in the proper Court.
3. Against the above order dated 28-2-2006, the appellant i.e. PASSCO filed the present appeal. On notice through the special messenger, Mr. Omer Aziz, Advocate appeared for respondent No.2 i.e. Saudi Pak Commercial Bank Ltd. Respondent No.1 (Messrs Omer Private Ltd. i.e. The plaintiff) was duly served but despite calls, no one appeared for it. Respondent No.1 was thus proceeded against ex parte.
4. The learned counsel for the appellant conceding that an objection in the leave application was raised by the appellant qua the jurisdiction of the learned Banking Court, contended that mere routine objection did not debar the appellants to file this appeal. And that if the routine objection of the appellant in the leave application could be stretched to mean the consent (though it was not) even then the same did not debar the appellant to file the appeal because an objection or concession against the law could neither bind the Court nor the parties and that there was no estoppel against the law. And that the learned Judge, Banking Court passed a void order containing no reasons whatsoever for the return of the plaint merely on the statement of respondent No.I's counsel. Further that the learned Judge, Banking Court was obligated under the law to first deal with and decide the leave applications of the defendants before proceeding to decide the objection or question of Court's jurisdiction.
Reliance was placed on the case of Messrs Sui Northern Gas Pipelines Ltd. Through Deputy Chief (Legal) v. Muslim Commercial Bank Ltd. Awari Hotel Branch, Lahore, through Manager and another 2006 CLD 816 in support of the contention that without the decision of the leave application, the learned Banking Court could not proc eed on the objection or, concession on jurisdiction to return the plaint.
5. In the contrary arguments, the learned counsel for respondent No.2 supported the impugned order of the return of plaint by seeking to apply the consent bar upon the appellant to file the present appeal. The learned counsel also supported the impugned order dated 28-2-2006 by contending that the appellant being beneficiary of the guarantee, was not a "customer under the Financial Institutions (Recovery of Finances) Ordinance, 2001 to maintain its suit.
6. Heard.
7. In the suit of respondent No.1, the leave applications were filed by the appellant and other defendants with objection to the jurisdiction of the learned Banking Court. These leave applications remained undecided. Instead on 28-2-2006, the learned counsel for respondent No.1 i.e. The plaintiff conceding to the defendant's objection stated that the learned Banking Court had no jurisdiction. Acting upon this statement, the learned Judge Banking Court returned the plaint through order dated 28-2-2006.
8. Could the learned Court so act is the question before us.
9. In the impugned order dated 28-2-2006, no reason or ground was recorded by the learned Judge Banking Court on the absence of the Court's jurisdiction to entertain the suit. The impugned order was passed mechanically. The learned Judge proceeded merely upon the statement and concession of the learned counsel for the respondent No.1 i.e. The plaintiff. The appellant and the other defendant had although formally objected to the, jurisdiction of the Banking Court in their leave petitions yet the.Learned Judge did not hear them while ruling the jurisdiction out. They were neither asked nor did they specifically consent to the return of the plant. The defendants were not even confronted as to whether they pressed their objection or not. The appellant or the other defendant were denied participation as well as the hearing in the proceedings. The learned Judge Banking Court also did not incline himself to inquire into and adjudge upon the reasons on the absence of the Court's jurisdiction. The Court also denied itself the benefit of the wisdom of law on the subject. The impugned order does not disclose the learned Judge's input or the applicability of mind. It is a non-speaking and inexplicit order containing no reasons to support the Judge's conclusion on the absence of Court's jurisdiction and consequent return of the plaint.
10. The blindfolded acceptance of the concession or objection on Court's jurisdiction without scrutinizing the legality of such objection or concession is a course contrary to the law, The Court system is created under the Constitution and the laws. Jurisdiction of the Courts is conferred and defined therein. The consent or concession of a party or the parties cannot create or confer nor can it curtail or case out jurisdiction in a Court. As such the objection of a defendant and confessional statement of a plaintiff thereto cannot absolve the Court of its duty to decide the question of existence or nonexistence of its jurisdiction with reasons and reference to the law.
11. Court's jurisdiction under the special statute i.e. Banking Companies Ordinance, 2001 was a serious and important question of law (may be a mixed question of law and facts). It could not have been dealt with superficially as has been done in this case by the learned Judge Banking Court. Its determination could not be made without reference and examination of the legal' provisions. Neither the facts of the case nor the provisions 'of law were referred to or considered by the learned Judge Banking Court in the impugned order.
12. The learned counsel for the appellant is justified in stating that even otherwise the appellant's objection on Court's jurisdiction was not relevant if under the law the Court had jurisdiction. An objection or concession contrary to the law did not bind the appellant or any party and the principles of estoppel were also inapplicable. The law on the subject has to be given effect to. In Muhammad Afzal v. Board of Revenue, West Pakistan and another 1967 SC 314, mere submission of a respondent to the jurisdiction of a Tribunal was held by the Honourable Supreme Court as a factor which "could not be thought to have conferred a jurisdiction on the Member which he did not possess, or to have waived his right to challenge the Member's power."
Following the above precedent, it was reiterated, in the case of Multan Electric Power Company Ltd. v. Muhammad Ashiq and others PLD 2006 SC 328 in terms of the case of Chief Administrator of Auqaf, Punjab v. Allah Ditta and another 1990 CLC 821 that "term jurisdiction' which refers to the legal authority and the competence of the Court to administer justice is conferred by law only. It can neither be conferred nor taken away by consent of parties. Even submission shall not confer jurisdiction where it does not exist."
13. We are also of the considered opinion that a, plea on jurisdiction, when raised by a defendant, is a plea of defence of the suit. Such plea or objection can be taken by a defendant in the leave petition and also in the written statement if submitted after grant of the leave. The suit in this case was terminated by the return of plaint even prior to the decision of the leave application. The suit did not reach the stage of the written statement.
14. Subsection (1) of section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 bars the' summoned defendant to defend the suit without first obtaining leave from the Banking Court.. The provisions thereof are negatively mandated that "the defendant shall not be entitled to defend the suit unless he obtains leave from the Banking Court as hereinafter provided to defend the same." Subsection (1) also prescribes a consequence of non-obtaining of the leave that "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....". The summoned defendant however, can file an application for leave to defend the suit in terms of subsections (3),
(4) and (5) ibid. On plaintiffs reply, the Banking Court under subsections (8) and (9) decides as to whether "substantial questions of law and facts have been raised in respect of which the evidence needs to be recorded......... " In the absence of such questions, the Court is to reject the application and pass a decree as per the law. If in the opinion of the Banking Court such questions exist it must grant leave to the defendant to defend the suit either on terms or otherwise. On unconditional leave, or if the leave is conditional on defendant's compliance with the condition (s), the learned Judge Banking Court is to treat the leave petition as the written statement and frame issues on the litigated questions. Evidence is then recorded and the suit is decided.
15. Stated precisely the summons issued under the Ordinance of 2001 in a banking suit, only allow the defendant a limited right to enter the Court for seeking its leave to defend the suit. The defendant has no right to enter the suit. It is only on the leave of the Court that the defendant gets the right to enter the suit for its defence.
16. In the leave proceedings, jurisdiction of the Court is also limited. Exercising the leave jurisdiction, the Court can only decide whether substantial questions of law and facts have been raised in the leave petition by the defendant or not and as to whether leave is to be granted to a defendant or not. If questions have been raised the 'leave is to be granted on terms or without terms. A leave petition is to be rejected if it does not show existence of triable defence questions. The Court is only to examine the veracity, the seriousness and the substance of the questions raised by the defendant in his leave application. The Court is not to decide these questions at the leave stage. It is on the grant of leave that the leave application will be deemed to be the written statement and the questions raised therein will be transposed into the issues and decided as such. In the present case the learned Judge Banking Court only received the leave petition and kept it pending. It was neither considered nor decided. But through the impugned order the plaint was returned.
17. In S.M. Akil Fakree v. Muhammad, Qamar-uz-Zaman PLD 1982 Karachi 745, it was held that "without obtaining leave to appear and defend, a defendant will not be heard by the Court in defence of the action............. And ........ Unless the bar is removed the suit will not be ripe for trial and the question of stay will not arise at all." It was further held that "unless the defendant obtains leave to appear he cannot even file............. An interlocutory applications".
In Habib Bank Limited v. Olympia Hosiery Works 1988 CLC 1340 also it was observed that leave application of the defendant was to be decided first before entertaining application for the rejection of plaint. Messrs United Distributors Pakistan Limited v. Ahmed. Zarie Services and another 1997 MLD 1835 further explained that till grant of leave, a defendant cannot file interlocutory application even on the jurisdiction of Court etc. In Messrs Platinum Insurance Company through Chief Executive v. Messrs Highways Bridge, Contractor International (Pvt.) Ltd. And another 1997 MLD 2394 the rule laid down was that in the absence of the grant of leave to, defend the suit, it was premature for the defendants to raise the issue of suit maintainability or that of the cancellation of revenue stamps on the promissory notes.
In Messrs Waheed Corporation through Proprietor and another v. Allied Bank of Pakistan through Manager 2003 CLD 245 it was adjudged that---"As the suit was not fixed for hearing, therefore, the learned Banking Court could not have rejected the plaint--- and --- the defendant cannot even file any ancillary/interlocutory application. And have no right to defend the suit, unless he is allowed by the Court to defend the suit" Falcon Ventures Pvt. Ltd. Through Chief Executive, lftikhar Ahmed v. Punjab Banking Court No.II, Lahore and another 2004 CLD 726 pronounced that allowing defendant's application under Order VII, rule 11, C.P.C. Before allowing leave to defend, was against the object and purpose of law. The learned counsel for the appellant also validly relied upon the case of Messrs Sui Northern Gas Pipelines Ltd. Through Deputy Chief (Legal) v. Muslim Commercial Bank Ltd. Awari Hotel Branch,. Lahore, through Manager and another 2006 CLD 816 wherein an Honourable Division Bench of this Court in identical circumstances decided that the learned Banking Court was obliged under the law to first decide respondent's application for leave to.
Defend the suit before invoking the provisions of Order VII, rule 10, C.P.C. For the return of plaint for absence of jurisdiction.
18. We therefore, hold that the impugned order dated 28-2-2006 for the return of plaint as passed by the learned Judge Banking Court No.1, Lahore, was against the law and it is set aside. The suit shall be deemed to be pending before the learned Banking Court who shall first consider and decide the leave applications filed by the defendants and then proceed to decide the question of its jurisdiction or/and the suit in accordance with law.
19. The learned counsel for the parties also informed us that after the impugned order dated 28-2- 2006, the respondent No.1 presented the plaint before the Civil. Court and obtained an interim injunction against encashment of the guarantees. As the impugned order dated 28-2-2006 has been set aside by this Court, the proceedings in the suit and the order passed therein by the learned Civil Judge shall cease to be )if any legal CLD effect. The case file shall be transmitted urgently by the learned Civil Judge to the learned Banking Court No.1, Lahore who shall decide the leave applications and the question of its jurisdiction within a period of sixty days from the date of the receipt of case files from the Civil Court. If the learned Banking Court decides to proceed with the suit, the application for the temporary injunction shall also be re-decided.
20. In above terms.