This is a petition under Article 9 of the Provisional Constitution Order, 1981, whereby Dur Muhammad Piracha petitioner wants this Grurt to declare the impugned order dated 19th May, 1981 passed by the learned Special Judge Banking II, Lahore, to be without lawful authority and of no legal effect.
2. The facts giving rise to this petition in brief are that Habib Bank Limited respondent No. 1 filed a suit on 6th April, 1976 in the Court of learned District Judge, Multan, against Dur Muhammad Piracha petitioner for the recovery of Rs. 1,31,577.90 under Order XXXVII, C.P.C. The case was entrusted to the learned Additional District Judge, Multan, for disposal. The petitioner filed an application for leave to defend the suit under Order XXXVII, rule 2, C. P. C. Which was refused by the learned Additional District Judge, Multan, and the suit decreed on 26th May, 1976. Thereafter, the petitioner filed another application under Order XXXVII, rule 4, C.P.C. Before the same Court for setting aside the judgment and decree dated 26th May, 1976. Respon--dent No.. 1 also filed the execution proceedings, The proceedings in the application under Order XXXVII rule -4, C.P.C. And execution proceedings were still pending when the Banking Companies (Recovery of Loans) Ordinance, 1976 (hereinafter called the Ordinance) was promulgated and by virtue of its subsection (4) of section 6 those proceedings stood transferred to Special Court. Established under section 5 of the Ordinance. On 19th May, 1981, the petitioner appeared before the learned Special Court and produced some documents to show that nothing was outstanding against the petitioner in respect of the alleged amount, whereupon the learned Court passed the following order:- On 20th May, 1981 the .Learned Court without waiting for the compliance of his order dated 11May; 1981, passed the following order :- Hence this writ petition.th
3. Learned counsel for the petitioner has attacked as order of the Special Court granting leave to defend the suit on payment of the entire amount of Rs. 1,31,577.90. It is urged before me that the order is illegal, without jurisdiction, arbitrary and of no legal effect and in any case unconditional leave to defend ought to have been granted to the petitioner.
Learned counsel has raised the following points
(i) That since the judgment and decree had been passed by the learned Additional District Judge in favour of the respondent against the petitioner on 26th May, 1976 for the recovery of the disputed amount, the learned Special Court was not com--petent to pass the impugned order on the application under Order XXXVII, rule 4, C.P.C. Before first having set aside the same and
(ii) that the impugned order having been passed without applying mind to the factual and legal aspect of the matter is arbitrary one.
4. Learned counsel for the respondent has vehemently defended the impugned order. He submits that the learned Special Judge was well within his authority to pass the impugned order for the reasons that under section 7 of the Ordinance he shall follow the summary, procedure provided for under Order XXXVII, C.P.C. And in any case the impugned order being interlocutory the High Court in its constitutional jurisdiction shall not interfere with the same.
5. 1 have gone through the material placed on record of this petition with care and have considered the arguments addressed by the: learned counsel for the parties. I am of the opinion that the impugned order is illegal, passed in excess of jurisdiction, arbitrary, has flouted the provision of relevant law and is thus liable to be inter. Feted with for the following reasons :-
(i) It is illegal and has been passed without jurisdiction because the suit for the recovery of the disputed amount had already been decreed on 26th May, 1976 by a competent Court and the petitioner had applied under Order XXXVII, rule 4, C.P.C. For setting aside the decree. Rule 4 of Order XXXVII reads as follows:- "After decree- the Court may, under special circumstances, set aside the decree, and if necessary stay or set aside execution, and may give leave to the defendant to appear to the summons and to defend the suit, if it seems reasonable to the Court so to do, and on such terms as the Court thinks fit."
The reading of this rule makes it very much clear that the. Learned Special Court had first to consider the question of setting aside the decree and having set aside the same could give leave to the defendant to appear to the summons and to defend the suit.
It is unfortunate that in the instant case, the learned Special Court without setting aside the decree granted leave to defend on payment into the Court of the entire amount. I am of the opinion that the learned Special Judge had no jurisdiction at all to grant leave to defend the suit without first having set aside the decree passed by the competent Court on 26th May, 1976.
(ii) It is arbitrary because the impugned order shows that the same was passed as a matter of course without applying mind to the relevant facts and law. Doubtless, under Order XXXVII, rule 3, C.P.C. The defendant has not right to defend the suit unless the Court grants leave and while granting leave to defend, the Court may impose conditions involving payment into the Court, furnishing Bank Guarantee or security, etc., as the Court thinks fit. The trial court has been given discretion in the matter of imposing the conditions which undoubtedly is to be exercised judiciously and not arbitrarily and the condition should accord with the situation. If the loan is secured or the defendant has good prima facie case the Court should grant unconditional leave and if the defendant has only an arguable case the Court may grant leave subject to furnishing security. As no appeal of revision lies against the interlocutory order. I am of the view that it was all the more necessary that the trial court should pass interlocutory orders with care and caution. It should apply its mind to the facts, material before it and should see that the conditions imposed are not harsh one and these accord with the situation. I am of the opinion that in case the trial Court intends to impose extreme condition, i.e. Payment into the Court of the entire amount, the Court is expected to pass a speaking order indicating that it has applied its mind to the facts, the defence, the documents produced by the parties and the propriety of the condition of payment into the Court of the entire amount. In this case unfortunately, I trod that the impugned order has been passed without going through the plaint, the application submitted by the defendant and without reading carefully Order XXXVII, rules 2, 3 and 4, C.P.C. The learned Special Judge has passed the impugned order as a matter of course in violation of the principles governing she exercise of judicial discretion ; and (i.e) It is unwarranted for the reason that there was no legal or moral justification for using this language in the impugned order ;.
The petitioner has, therefore, rightly stated in ground No: (x) of the petition "that respondent No. 2 has passed the impugned order which is surprising and based on satire".
I am afraid this order cannot be termed as a judicial order:
6. I am of the considered opinion that the impugned order has been passed without jurisdiction, is illegal and violates the law and principles governing the exercise of jurisdiction.
7. Learned counsel for the respondent states that in spite of these findings this Court shall not interfere with the impugned order because the same is an interlocutory one. In support of this he has placed reliance on International Food Centre Limited v. United Bank Limited and two others (1982 CLC 108).
8. 1 have gone through the judgment referred to above. t find that the same is based on altogether different facts. I am of the view that if this Court is satisfied that an interlocutory order suffers from infirmities, affects the jurisdiction of Court or tribunal then it would be failing in its constitutional duties to refuse to interfere with the same and allow a Court or tribunal to pass illegal orders under the cover of Special Law because once the Court comes to the conclusion that Court or a tribunal has exercised jurisdiction by flouting the provisions of relevant law, has violated the principles governing the exercise of judicial discretion, acted arbitrarily, passed an illegal and unfair order without applying its mind, it would then be the duty of this Court while sitting in its constitutional duties to strike down such order regardless of the fact that the interference may defeat the legislative intent, i.e. Speedy and efficacious method for the recovery of loan advanced by the Bank. I realise the difficulty but at the same time sitting as a Court of Law, the Court cannot permit a Court or tribunal to act in a manner in which the learned Special Judge has acted by passing the impugned order in a suit for the recovery of a huge amount.
9. The result is that the petition is accepted and it is declared that the impugned order having been passed without lawful authority is illegal and of no legal effect- and the same is hereby set aside with the direction to the learned Special Court to apply its mind to the legal and factual aspect of the matter and decide the same in accordance with law.
No order as to costs.