' ROOH-UL-AMIN KHAN, J.---This common judgment shall dispose of instant F.A.B No,54-P of 2006 as well as connected F.A.B. No,55-P of 2006, titled, "Messrs Soneri Bank Limited v. Messrs Azeem Match
(Pvt) Ltd. And others", as both are arising out of the consolidated judgment and decree dated 26- 6-2006, of the Banking Court-I, Peshawar, passed in suits Nos.190/1 and 191/1 of 2004.
2. Brief but relevant facts forming the background of instant two appeals are that plaintiffs Azeem Tapes Limited through Mr. Fuad Ishaq 99-Industrial Estate Jamrud Road, Peshawar and others (hereinafter referred as respondents), filed a suit under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 for Rs,2,358,693.00, together with damages to the tune of Rs,25 Million, rendition of accounts, declaration and ancillary relief with the following prayers:--
(a) A decree for a sum of Rs,2, 358,693.00 may be awarded to the plaintiffs against the defendant Bank as the money unlawfully charged by the defendant Bank and wrongly made to pay by the plaintiffs due to the illegal treatment of the account of the plaintiffs along with a decree for a sum of Rs,25.00 Million may be awarded to the plaintiffs and against the defendants, as damages on account of breach of contract and violation of State Bank of Pakistan's Circulars.
(b) A decree that the properties mortgaged/charged/ hypothecated in favour of the defendant Bank be ordered to be released and discharged.
(c) A decree for release of the personal guarantees of the guarantors.
(d) A decree for declaration may kindly be passed in favour of the plaintiffs and against the defendant Bank that the act of charging interest/mark up and compound mark up in the absence of any agreement on mark up basis and/imposition of various penalties, is illegal, arbitrary and against the agreed terms and conditions.
(e) A decree for rendition of account may kindly be passed in favour of the plaintiffs and against the defendant Bank. The defendant Bank may kindly be ordered to file complete and true statement of account without any mark up and additional amounts received by the defendant by way of pressurizing and blackmailing the plaintiffs be paid back by the defendant Bank to the plaintiff Company along with cost of funds and damages suffered by the plaintiffs, as may be determined by this honourable court after recording of evidence.
(f) Costs of the suit may be granted.
(g) Any other relief that this honourable court may deem appropriate under the facts and circumstances of the case may also be allowed to the plaintiff Bank.
3. As alleged in the plaint, the respondents(a private Ltd. Company) engaged in the business of manufacturing Tapes of all kinds and descriptions has established its Industrial Unit/Match Factory, at 99-Industrial Estate Jamrud Road, Peshawar. The defendant (bank) within the meaning of section 2 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter referred as Ordinance 2001) is a financial institution. During banking business relation with the defendant (hereinafter referred as appellant-bank), sanctioned a finance facility in favour of the respondents, but failed to disburse the aggregate amounts of the said facility to respondent and thereby committed breach of contract; that, appellant-bank got the signatures of the respondents on.
Various blank forms for finance agreements for sale and purchase; that the appellant-bank claimed excess amount from the respondents on different occasions, in violation of the provisions of the Contract Act, 1872, for which the bank is liable to return the excess amount received through misrepresentation and breach of trust; that the above act of the appellant-bank on one hand has caused heavy loss to the respondents on account of non-fulfillment of its contractual obligations and on the other hand, led its business to complete ruination. The respondents also urged that their case is covered under BCD Circular No,13 and BCD Circular No,32 of 1984, which lay down the methods of financing by the banks and the financial institutions being applicable w.e.f, 1995; that facility availed by the respondents in pursuance of the agreement has already been paid entirely to the appellant-bank and no amount is due and outstanding against them. Rather, the appellant- bank has received an excess amount from the respondents but the appellants despite request are reluctant to furnish the true and correct statement of the accounts of the respondents which necessitated them to file instant suit.
4. The appellant Bank on receipt of notice, within due limit of time, in terms of section 10 of the Ordinance, filed application for leave to defend the suit wherein the claim of the respondents was vividly denied. It is pertinent to observe that the appellant-bank raised a preliminary objection regarding limitation. Apart from this, the appellant-bank also filed a suit for recovery of Rs,9,203,692.31 against the respondents. After hearing the parties, the trial Court while granting leave to defend vide order dated 13-12-2004, passed the following order:-- "Counsel for the parties present. Arguments heard. Record perused.
' The defendant Bank in its leave application has resisted the plaintiffs suit and attached various documents in support of its stand. The plaintiffs on the other hand, have seriously disputed the authenticity of the agreements, the guarantees and other documents, upon which the defendant bank is basing its claim. Allegations of false entries in the statement of account and charging of illegal markup and markup on markup have also been raised in the leave application. Availing of the finance facilities in question and execution of various documents as security, therefore, has also been denied. I feel, that the parties have raised allegations and counter allegations and the controversy between the parties cannot be resolved effectively and properly without recording of evidence. Consequently, the leave application is accepted and the parties are directed to adduce their evidence on the following issues:
(1) Whether the S/A contains markup on markup, illegal. Penal ties and markup beyond the expiry period of the agreements?
(2) Whether the documents allegedly executed by the plaintiffs are without consideration being executed in connection with the previous facilities, if so its effect?
(3) Whether the documents attached by the defendant Bank without its leave application pertain to the defendants?
(4) Whether the defendant bank has illegally rolled over the alleged facilities without fres' disbursement?
(5) Whether the S/A has been prepared in accordance with law?
(6) Whether the claim of the defendant bank is in accordance with law and agreements between the parties?
(7) What amount the plaintiffs are liable to pay to the defendant Bank?
(8) Whether the plaintiffs are entitled to the decree, as prayed for?
(9) Relief.
' Since the dispute between the parties mainly pertains to the rendition of the accounts, therefore, as per request of the parties, Messrs Anwar Javed and co-Chartered Accountants 2nd floor FC Building Peshawar Cantt. Is appointed as 'Amicus Curiae' at the expenses of the plaintiffs, to sort out the difference, if any, between what is actually due and what in fact has been paid by the plaintiffs and the amount, if any, paid in excess to the bank, who shall submit his detailed report in light of the above issues within a month from today. Both the parties are directed to extend full cooperation/necessary assistance to the Chartered Accountant in reconciliation etc. Of accounts.
' File to come up for report of the 'Amicus Curiae' on 17-1-2005". (the underline are ours for emphasis).
5. In compliance with the above said order, Amicus Curiae, submitted his report before the court on 17-2-2005 On even date, the appellant-bank filed an application under Order VII, rule 11, C.P.C., for rejection of plaint on the ground that the suit is barred by time. Both the suits were consolidated.
On the next date of hearing, the appellant-Bank filed objection petition against the report of Amicus Curiae while the respondents filed reply to application under. Order VII, rule 11, C.P.C. And the case was adjourned for arguments on the preliminary objection raised by the appellant-bank and application under Order VII, rule 11, C.P.C., and after hearing the parties, ultimately, the suit of the respondent was decreed to the extent of recovery of Rs,2,358,693.00, with costs of the suit. The appellant-bank was directed to redeem all the mortgaged properties secured, and in addition, to release the guarantees of the directors (past or -present) and power of attorneys were being revoked. Simultaneously, the proceedings were converted into execution proceedings in terms of section 19 of the Ordinance, 2001. Hence, this appeal.
6. Having heard the learned counsel for the parties and going through the record, it reveals that the trial court while granting leave to defend had appointed Mr. Anwar Javed and Company Chartered Accountants as an Amicus Curiae to ascertain the dispute between the parties. Section 5(8) of the Ordinance, 2001, empowers the. Banking Court to appoint an Amicus Curiae in such like disputes.
For proper understanding section 5(8) is reproduced as under:- "S.5. Establishment of Banking Court. (1) The Federal Government may, by notification in the official Gazette, establish as many Banking Courts as it considers necessary exercise jurisdiction under this Ordinance, and appoint a Judge for each of such Courts and where it establishes more Banking Courts than one, it shall specify in the notification the territorial limits within which each of the Banking Courts shall exercise its jurisdiction.
(2)
(3)
(4)
(5)
(6)
(7)
(8) The Banking Court, may if it so requires, be assisted in technical aspects of banking transactions involved in any case by an amicus curiae who has at least ten years experience of banking at a senior management level in a Financial institution of repute or the State Bank of Pakistan and has the following qualifications, namely:-
(i) A degree in Commerce and Account or in Economics, or
(ii) A degree in Business Administration; or
(iii) has completed a course in banking from the Institute of Bankers, Pakistan.
(The underline supplied for emphasis)
7. The bare perusal of the section quoted above, depicts that a person, who has to be appointed as an amicus curiae, must be equipped with experience of at least 10 years at a senior management level (firstly) in a Financial institution of repute or (secondly), the State Bank of Pakistan. He shall also be qualified and possessing a degree in Commerce and Account or in Economics or a degree in Business Administration; or has completed a course in banking from the Institute of Bankers, Pakistan. The word "Financial Institution" used in the section ibid, is also defined by the Ordinance, 2001, which means and includes:--
(a) Any company whether incorporated within or outside Pakistan which transacts the business of banking or any associated or ancillary business in Pakistan through its branches within or outside Pakistan and includes a government saving bank, but excludes the State Bank of Pakistan.
(b) A modaraba or modaraba management company, leasing company, investment bank, venture capital company, financing company, unit trust or mutual fund of any kind and credit or investment institution, corporation or company; and
(c) Any company authorized by law to carry on similar business, as the Federal Government may by notification in the official Gazettee, specify;
8. An amicus Curiae's report was objected by the appellant, therefore, during proceedings, he was examined as C.W.1, wherein he described his qualifications in the following words:-- "I started my carrier as Chartered Accountant with Arabian American Oil Company Dehran Saudi Arabia since 1978 till 1980. I worked with the Ernst Whinny International Chartered Accountants for Middle East Operations. I rejoind AF Ferguson & Company Chartered Accountants in Pakistan in 1981. I was appointed as Chief Internal Auditor by Attock Refinery Limited and worked there till 1983. I was appointed by the Government of N.-W.F.P. As Assistant General Manager Khazana Sugar Mills in BPS-19 in 1983 and was promoted as General Manager Finance in Sarhad Development Authority.
I .Vas appointed by the Federal Government as Director General in the Prime Minister Inspection Commission in 1990. I was transferred to the Provincial Government and served as Finance Director, Financial Advisor, Director Planning, Implementation and Administration, Director Projects Export Processing Zone in different Departments and finally served as Secretary N.-W.F.P. Worker's Welfare Board".
' During cross-examination he has admitted this fact that he has never served as employee in any Bank or Financial Institution, but has worked as an auditor on behalf of AF Ferguson & Company. He also admitted it correct that he has been appointed as an amicus curiae in three suits bearing numbers 190/1, 191/1 and 197/1 of 2004, and himself has prepared the report. He further admitted it correct that the license of Messrs Anwar Javed and Company was suspended by the Institute of Chartered Accountants of Pakistan; however, the same was restored by the order of this court and the august Supreme Court of Pakistan. While replying to a question of respondents, he reiterated that he is a professional Chartered Accountant and practicing under a license from the Institute of Chartered Accountants of Pakistan.
9. The above statement of amicus curiae recorded aslo C.W.1, if taken in juxtaposition with section 5(8) of the I Ordinance, 2001, it would divulged that the amicus curiae, appointed by the trial Court, was not possessing the qualifications as enumerated in the section ibid. He was lacking experience of 10 years at banking side, as provided by the section 5(8) of the Ordinance, 2001. Similarly, he has never worked at senior management level in any Financial Institution of repute or the State Bank of Pakistan. The Ordinance 2001, provides a specific mode and conferred jurisdiction on the Tribunal/the Banking Court to appoint an amicus curiae being a person of specific and particular qualifications and experience. Thus, it was imperative on the trial court to appoint an amicus curiae possessing the qualifications and experience as enumerated in the statute. It is golden principle of administration of justice that where a law required a thing to be done in a particular manner, then the same would be lawfully done only, if was done in such manner, and not otherwise. The statute i.e, the Ordinance, 2001 limits the appointment of an amicus curiae in a particular form, doing otherwise, the same would amount to nullity in the eye of law. The Ordinance, 2001 is a Special law, enacted for specific type of cases and the special Courts are bound to follow it in its strict sense. In view of the above, the appointment of amicus curiae being illegal and against the commands of the statute, and the report furnished by him, is hereby set aside.
11(sic.) Record further depicts that before leave granting order, both the parties have produced their respective lists of witnesses and in terms of section 10(10) of the Ordinance, 2001, the trial Court had reduced the controversial points into as many as nine issues including the relief, but during proceedings, neither opportunity was provided to the parties to produce their respective evidence, nor they were allowed to exhibit the documents available on file. In a suit for recovery of finance, the Ordinance, 2001, provides a summary procedure for disposal of the cases, according to which, if a substantial question of law or fact is raised by the defendant, in respect of which, evidence is required to be recorded, the Banking Court, after accepting leave to defend application, shall treat the application for leave to defend as a written statement and shall frame issues relating to substantial question of law and facts and shall record evidence thereon. The trial of a civil suit commences after the framing of issues under Order XIV, C.P.C., which are meant for ascertaining the real dispute between the parties by narrowing down the area of conflict and determining where the parties differ.
' After framing issues, the court shall provide opportunity to the parties to lead their respective evidence for enabling the court to render an effective judgment. During the trial, the parties are required to prove the issues and not the pleadings and similarly, the court is bound to decide each and every issue.
12. Section 7(2) of the Ordinance, 2001, provides that the Banking Court shall in all matters in respect of which specific procedure has not been provided in the Ordinance, 2001, would follow the procedure laid down in the C.P.C.
1908. Once leave is granted, the Banking Court is under legal obligation to adopt the procedure postulated in the Civil Procedure Code. In the instant case, despite framing of issues and availability of lists of witnesses, the Banking Court has adopted an unprecedented short cut way and has deviated from the procedure provided under the law.
13. The perusal of record further divulges that at the very outset, in application for leave to defend, the appellant- bank has raised a preliminary objection regarding maintainability of suit on the basis of limitation, which was brushed aside by the trial court and at least a legal issue on the point of limitation was not framed. Besides, the appellant bank had filed an application under Order VII, rule 11, C.P.C., for rejection of the plaint, which was also fixed for arguments and order along with objection on the report of amicus curiae, but the same remained undecided. In the administration of justice, propriety required that when an interlocutory application is pending and that is of such a nature, which might go to the root of the case, then before passing any final order on the suit, the trial Court shall decide the same, first. During the pendency of application under Order VI, rule 11, C.P.C., it was incumbent upon the trial Court to first dispose of the same either way through a specific order and then to decide the case. Failure of the trial Court to decide the application would definitely vitiate the impugned judgment. The Banking court has decided the suits in a summary manner without adopting the procedure provided by the Ordinance, 2001 and Civil Procedure Code.
14. For the reasons discussed above, both the appeals are allowed, the impugned judgments and decrees of the trial court/Banking court are set aside and the cases are remanded to the Banking Court to decide the suits afresh on merits, after framing additional issue on limitation and allowing the parties to produce evidence in accordance with law within a period of 3 months, positively as the case is pending since 2004. The trial court may appoint amicus curiae under section 5(8) of the Ordinance, 2001, if required. Parties are directed to appear before the trial Court on 30-4-2013.
Office is directed to ensure transmission of record to the trial Court immediately.