' NADEEM AKHTAR, J.---The question involved in this appeal is, whether the Banking Court was justified in simply disposing of the application for leave to defend, instead of deciding it by granting or dismissing it, by directing the parties to file their respective fresh breakup of accounts, and further by decreeing the Suit against the appellant on the basis of the accounts so filed.
2. The relevant facts giving rise to the present appeal are that the respondent-bank filed Suit No, 496 of 2009 against the appellant before the learned Banking Court No,! At Karachi for recovery of Rs,5,597,636.61 under section 9 of the Financial Institutions (Recovery of Finances) Ordinance XLVI of 2001 ('the Ordinance'). Upon service of notice, the appellant filed application for leave to defend the Suit under section 10 of the Ordinance, which was within time and was in the form of written statement as required under section 10 ibid, to which replication was filed by the respondent. After hearing the learned counsel for the parties, the application was disposed of by the learned Banking Court vide order dated 28.08.2009. The operative part of the said order is reproduced here for the sake of convenience and ready reference: ' The dispute between the parties is on point of exaggerated mark up and the payment made by the defendant which has not been shown in the statement of account. I therefore dispose of the application with direction to both the parties to settle their claim by submitting relevant documents and filed (sick fresh break up on 7.10.2009. Application is hereby disposed of. "
3. In compliance of the aforesaid order, the parties filed their respective accounts, whereafter the Suit of the respondent was decreed with costs against the appellant through the impugned judgment and decree in the sum of Rs,5,597,636.61 with cost of funds as specified by the State Bank of Pakistan from the date of default till realization, and the prayers for sale of the mortgaged property and hypothecated assets were also granted. Except for a vague statement in the impugned judgment that the appellant did not file any documentary proof and the respondent's claim appeared to be ,correct and true as there was nothing on record in its rebuttal, no other reason has been assigned by the learned Banking Court for decreeing the Suit against the appellant. We are of the view that the impugned judgment lacks proper reasons and is not a speaking judgment.
4. Section 10 of the Ordinance provides the manner of filing an application for leave to defend by the defendant in a banking Suit, the limitation thereof, the form and format thereof, the mandatory requirements in relation to the contents thereof, and the implications in the event of the grant or dismissal thereof. Subsection (1) of section 10 ibid provides that in any case in which summons have been served on the defendant as provided for in subsection (5) of section 9 of the Ordinance, the defendant shall not be entitled to defend the Suit unless he obtains leave from the Banking Court to defend the same and 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 or such other material as the Banking Court may require in the interest of justice.
Subsection (8) of section 10 ibid provides that the Banking Court shall grant the defendant leave to defend the Suit if on consideration of the contents of the plaint, the application for leave to defend and the reply thereto it is of the view that substantial questions of law and or fact have been raised in respect of which evidence needs to be recorded. Under subsection (11) of section 10 ibid, where the application for leave to defend is rejected or where the defendant fails to fulfill the conditions attached to the grant of leave to defend, the Banking Court shall forthwith proceed to pass judgment and decree in favour of the plaintiff against the defendant.
5. It may be noted that the Banking Court can exercise jurisdiction under subsection (1) or under subsection (11) of section 10 ibid and pass a decree thereunder in favour of the plaintiff only when summons in the prescribed form are issued and served on the defendant as provided in subsection (5) of section 9 of the Ordinance; the plaint is compliant with the mandatory requirements of subsection (3) of section 9 of the Ordinance; the allegations of fact in the plaint disclose a subsisting cause of action against the defendant; the Suit is maintainable by all standards and is not barred by any law; and, the plaintiff is able to show that he is entitled to the relief prayed for against the defendant. If any one of the above conditions precedent for a competent Suit are lacking, the plaintiff shall not be entitled to a decree either under subsection (1) or under subsection (11) of section 10 of the Ordinance. It.Must be kept in mind that dismissal of application for leave to defend does not mean that the entire claim of the plaintiff in a Suit under the Ordinance should be granted straightaway without examining the claim of the plaintiff. In such an event, no doubt the plaintiff becomes entitled to a decree, but only to the extent of such amount which is permissible in law. It has now been well-settled that markup more than the agreed rate and/or beyond the agreed period cannot be granted to the financial institution. Similarly, no other charges or amounts can be allowed to the financial institution to which the customer had not agreed. The Banking Court is duty-bound to examine the claim of the financial institution in the light of the above principles before passing the decree.
6. The above provisions show that a decree can be passed by the Banking Court in a banking Suit against the defendant either under subsection (1) or under subsection (11) of section 10 of the Ordinance, that is to say only when the defendant fails to file an application for leave to defend, or his application is rejected, or after the grant of leave to defend to him and after appreciation of evidence led by the parties, the Banking Court comes to the conclusion that the plaintiff is entitled to a decree. Perusal of the impugned order dated 22.08.2009 and the impugned judgment shows that the Suit has not been decreed against the appellant under any of the above provisions as he neither failed in obtaining leave nor was his application for leave to defend rejected. As noted above, instead of deciding his application for leave to defend one way or the other, that is, by granting or dismissing it, the same was simply "disposed of" with direction to the parties to file their respective fresh breakup of accounts. It is our considered view that the concept of "disposing of" an application for leave to defend is completely alien and contrary to the spirit and provisions of the Ordinance as an application for leave to defend has to be either rejected or allowed by the Banking Court. The order passed by the learned Banking Court "disposing of" the appellant's application for leave to defend and the impugned judgment and decree passed in pursuance and as a consequence thereof, are, therefore, illegal in our humble opinion and the same cannot be allowed to remain in the field.
7. We are, also of the view that the procedure adopted by the learned Banking Court by directing the parties to file their respective fresh breakup of accounts after disposing of the application for leave to defend, being contrary to the spirit and provisions of the Ordinance, was also illegal. Such practice, if adopted by the Banking Court after dismissal of the application for leave to defend, would also be illegal. It is to be noted that the Ordinance provides only one opportunity to each of the two parties to place their accounts before the Banking Court. Such opportunity is provided to the plaintiff under Section 9 of the Ordinance and to the defendant under section 10 of the Ordinance. After filing the Suit and the application for leave to defend, the plaintiff and the defendant, respectively, cannot be allowed further opportunities to place their accounts before the Banking Court as this would defeat the very purpose of sections 9 and 10 ibid. This distinctive feature of the Ordinance, wherein the proceedings are of summary nature, must have been introduced specially and clearly with the view that the dispute of accounts, if any, should come before the Banking Court straightaway through the pleadings of the parties so that such dispute can be resolved in a summary manner without going through the lengthy procedure, of evidence.
After examining the contents of the plaint and the application for leave to defend, the discretion vests with the Banking Court to allow the defendant to defend the Suit, or reject his application. In order to succeed, the defendant shall have to show that his application for leave to defend is compliant with all the mandatory requirements of Section 10 of the Ordinance; and likewise, the plaintiff shall have to show, even if there is no application for leave to defend the Suit or leave is refused to the defendant, that his plaint is compliant with all the mandatory requirements of section 9 of the Ordinance, and the Suit is not barred by any law. As there is no provision in the Ordinance to provide further opportunities to the parties to file their accounts or fresh breakups thereof after filing the Suit or application for leave to defend, as the case may be, we hold that the learned Banking Court was not justified in granting such opportunity to the parties after disposing of the application for leave to defend. However, there is only one exception to the above rule, that is, if after filing the Suit or application for leave to defend, any payments are made by the defendant or any adjustments are made by the plaintiff, parties may be called upon by the Banking Court to place the details of such subsequent payments or adjustments on record in order to decide the precise amount to which they may be entitled.
8. In support of our above views, we respectfully rely upon the case of Apollo Textile Mills Ltd. And others v. Soneri Bank Ltd., PLD 2012 Supreme Court 268 = 2012 CLD 337, wherein it has been held by the Hon'ble Supreme Court that the plaintiff institution and the defending customer have identical statutory responsibility under sections 9(2), 9(3) and 10(4) of the Ordinance, to plead and state clearly and particularly the finances availed by a defendant, repayments made by him, the dates thereof, and the amounts of finance repayable by such defendant, who is saddled with an additional responsibility to also specify the amounts disputed by him. It has been further held that a defending customer is obliged to put in a definite response to the bank's accounting, and under subsections (3) and (4) of section 10 of the Ordinance he has to compulsorily plead and answer in the application for leave to defend his accounts as well as the facts and amounts disputed by him as repayable to the plaintiff. It has been further held that a banking Suit is normally a Suit on accounts which are duly ledgered and maintained compulsorily in the books of accounts under the prescribed principles/standards of Accounting in terms of the laws, rules and banking practices; as such instead of leaving it to the option of the parties to make general assertions on accounts, the Ordinance binds both the sides to be absolutely specific on accounts; and the parties to a Suit have been obligated equally to definitely plead and to specifically state their respective accounts. It has also been held that the controversies are confined to the claimed and/or the disputed numbers, facts and reasons thereof; unnecessary controversial details, the evidence thereto and the time of the trial, are curtailed; and, the trial would remain within the laid out parametrical scope of the claimed and the disputed accounts. It has been specifically held that non-impleadment of accounts under subsections (3) and (4) of section 10 ibid and subsection (3) of section 9 of the Ordinance in terms thereof, entails legal consequences under subsections (1), (6) and (11) of section 10 ibid. It has been further held that because of the Ordinance being a special law, the provisions of section 4 thereof override all other laws; the provisions contained in the said sections require strict compliance; and, non-compliance thereof attract consequences of rejection of the application for leave to defend along with decree or dismissal of the Suit, as the case may be.
9. In view of the above discussion, we have no hesitation in holding that the application for leave to defend filed by the appellant was not decided by the learned Banking Court as required under the Ordinance, and the procedure adopted by the learned Banking Court after disposing of the application for leave to defend was illegal. We could have decided the said application in this appeal, but we feel that it should be decided by the learned Banking Court as it has failed in exercising the jurisdiction vested in it by law. For this reason and also as we have found that the impugned judgment is without any reasons, we have decided to remand this matter to the learned Banking Court for deciding the appellant's application for leave to defend afresh in accordance with law.
10. Foregoing are the reasons of the short order announced by us on 18.12.2014 whereby this appeal was allowed with no order as to costs, the impugned order dated 28.08.2009 and the impugned judgment and decree passed by the learned Banking Court No,I at Karachi in Suit No,496 of 2009 were set aside, and the matter was remanded to the learned Banking Court with direction to decide the application for leave to defend filed by the appellant/defendant in accordance with law within a period of sixty (60) days from the date of receipt of the judgment.
11. It appears that it is a common practice followed by the Banking Courts as we have observed in a large number of cases that instead of deciding the applications for leave to defend in accordance with law, the same are disposed of by directing the parties to file fresh breakup of their accounts.
As this practice has been held by this Court to be illegal and contrary to the spirit and provisions of the Ordinance, the learned Registrar of this Court is directed to circulate this judgment amongst all the Banking Courts in the Province of Sindh for information and compliance.