Through this single order , I intend to decide this constitutional petition alongwith WP No.378 of 2021 filed by the petitioner and his wife respectively in their capacity as customers of the respondent bank as common questions of law and facts are involved in both these matters.
2. The respondent/plaintif f bank has filed two separate recovery suits under the Financial Institutions (Recovery of Finances) Ordinance, 2001 ('Ordinance'), one against the petitioner and the other against his wife in Banking Court at Sahiwal. Through this constitutional petition, the petitioner states that the learned Banking Court has orally refused to entertain and receive on record the applications of the petitioner and his wife for rejection of plaints/dismissal of the recovery suit filed by respondent/plaintif f bank against them respectively and prays that the said Court be directed to receive the said applications on record. It is furthe r prayed that the order dated 22.10.2020 passed in the case of instant petitioner , whereby the Banking Court has allowed the respondent bank to file reply to the petitioner 's application for leave to defend, be set-aside and the reply filed by the respondent bank be discarded.
3. It is contended by learned counsel for the petitioner that the respondent-Banking Court, Sahiwal, is not receiving the application under Order VII Rule 11, C.P.C filed by the petitioner for enablin g the petitioner to bring on the record the fact that the matter has alread y been finally decided by the Banking Mohtasib, Pakistan, therefore, the same could not be re-agitated by the respondent bank before the Banking Court, Sahiwal and plaint merited to be rejected forthwith.
4. When questioned that whether the said objection was raised through the application for leave to defend ('PLA ') filed by the petitioner and the said application has been decided by the Court or not, he states that the said objection has already been raised through the said application, which is still pending, however , as the case cannot proceed further in view of its finalization at the level of Banking Mohtasib, the application for rejection of plaint merited to be received on the record and plaint was liable to be rejected by considering the same. In response to another query , as to how his application for rejection of plaint could be accepted and allowed, when his application for leave to defend was already pending adjudication before the Court and Court could not determine any other issue before decision of the application for leave to defend, he relies upon the judgment of this Court reported as "MCB Bank Limited v. Muhammad Saeed" (2019 CLD 63) to argue that in the said case before decision of the application for leave to defend, application for interim relief was entertained and allowed.
5. Case of the petitioner is that the learned Banking Court has refused to receive on record his application for rejection of plaint of recovery suit filed by the respondent bank whereas petitioner 's application for leave to defend has not yet been decided. By placing reliance on Muhammad Saeed' s case (supra), petitioner claims that his application be entertained on the record. It is observed that in the afore referred case the application for interim relief was filed by the customer of the bank in his capacity as plaintif f in the suit for declaration, etc., filed by him before the Banking Court and not as a defendant. Consequently , in the said case he was not required to obtain leave to defend the suit before proceeding any further in the matter and in the said circumstances this Court had held the said application for grant of interim relief as maintainable. However , in the present case the petitioner is a defendant and is required in ordinary circumstances to obtain leave to defend in the matter before seeking any other relief through interlocutory application(s). In these circumstances the question arises whether the learned Banking Court was obliged to receive the petitioner 's application on record and could reject the plaint of the suit summarily without deciding the application for leave to defend, especially on the basis of facts that were still in issue between the parties.
6. For resolution of the afore-referred question reference may be made to the case of "Shaukat Ali vs. Agricultural Development Bank of Pakistan Limited through Chairman and 2 others" (2006 CLD 59), wherein in a recovery suit filed by bank the order of acceptance of application under Order VII Rule 11 CPC by the Banking Court resulting in rejection of plaint before acceptance of application for leave to defend was set-aside and the matter was remanded to the Banking Court to first decide the application for leave to defend before proceeding further in the matter . The relevant portion of the order is reproduced below: "We have heard the learned counsel for the parties and considered their respective stance and the material on the record. We are constrained to observe that the plaint could not be ordered to be rejected for the reason which prevailed with the learned Banking Court and the manner the provisions of Order VII, rule 11 of the Code of Civil Procedure, 1908 were invoked. It may be observed that the averments at the stage made in plaint as to the disclosure of cause of action were to be taken into consideration. It may also be observed that the obtention of loan had indeed not been denied by the appellant. His case was that he had made certain payments to clear the liability towards loan amount and that the demand raised through notices was exaggerate d and factually incorrect. Prima facie the averments of the plaint did disclose the accrual of cause of action for the said suit. Since the case was still at the preliminary stage, no extraneous material could be taken into consideration for non-suiting the appellant/ plaintiff. For determining the real controversy and the quantum of liability , the Court could grant leave to defend the suit as was prayed for by the defendants/respondents, but it erred in law to reject the plaint.
We are therefore, inclined to set aside the judgment of the learned Banking Court, result whereof would be that the suit as also the application for leave to defend filed by the respondents would be deemed pending before the learned Banking Court, which shall be heard and decided in accordance with law .
The appeal is accepted accordingly with no order as to costs."
7. In another case titled "The Bank of Punjab through Principa l Officer/Constituted Attorney vs. Rab Nawaz and 2 others" (2016 CLD 760), wherein after obtaining partial decree in the first recovery suit the plaintif f-Bank instead of filing execution petition filed another recovery suit on the same cause of action, which was contested by the respondents on the plea of res-judicata and limitation, and was dismissed by the Banking Court, this Court set- aside the said order and remanded the matter for decision afresh by holding as under:- "It appears that the appellant bank did not file the execution of the decree but filed another suit (Suit No. 388 of 2008) on 10.09.2008 against respondents Nos. 1 and 2 for the recovery of Rs.867,863/- on the same cause of action as was alleged in earlier suit without mentioning the fact that earlier suit had been partially decreed on 31.01.2002. Respondents Nos.1 and 2 filed their application for leave to defend and, inter alia, took plea res judicata. After hearing the parties at leave stage, the banking court vide order dated 04.05.201 1 dismissed the suit filed by the appellant bank on the ground that the decree in the first suit had attained finality and, therefore, the second suit on the same case of action was barred.
After hearing the arguments of the learned counsel for the parties, it is clear that decree dated 04.05.201 1 passed by the banking court cannot be sustained. The banking court in the first place could not have dismissed the suit filed by the appellant at the leave stage. The proper course to be adopted by the banking court was to grant leave to defend the suit to the respondents and then to frame issues for its decision thereon. Furthermore, the judgment in the first suit by the banking court directed the respondents to keep on depositin g the installment amount of the loan as per terms of the agreement. It needs to be thrashed out as to whether the said direction furnished a fresh cause of action to the appellant bank as prima facie the agreement and the balance installment amounts were kept alive by the said direction. It may also be noted that banking court did not disclose under which provision of law the second suit filed by the appellant bank was time barred. We do not propose to dilate on this aspect of the matter lest it would prejudice the case of either of the parties before the banking court.
In the circumstances, this appeal is allowed and order and decree dated 04.05.201 1 is set aside with the result that the suit No. 388 of 2008 by the appellant bank shall be deemed to be pending before the banking court which shall be decided by it after granting leave to defend the suit to the respondents."
Same principle of law has been reiterated by the Sindh High Court in the case reported as "Anees-ur-Rehman v.
Faysal Bank Limited through Manager" (2019 CLD 1031 ) by observing that Banking Court in the first instance had to decide the fate of the application for leave to defend on merits and thereafter , it was at liberty to reject the plaint of the plaintif f, if it reached conclusion that the case was liable to be rejected under Order VII, Rule 11, CPC but before giving finding on application for leave to defend, could not reject plaint under Order VII, Rule 1 1 CPC.
8. The Sindh High Court took a different view in a case reported as "National Bank of Pakistan v. Messrs. Ark Garments Industry (Pvt.) Ltd. through Managing Director and 2 others" (2015 CLD 179), wherein defendants without seeking leave to defend the suit sought rejection of plaint by filing application under Order VII, Rule 11, C.P.C. on the plea that bank did not have any cause of action against them. The Court held that words appearing in Section 10(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001, were of great importance as those indicated that if defendant failed in obtaining leave to defend the suit, his admission would be deemed only to the extent of allegations of fact in plaint and decree in favour of plaintif f might be passed only because of such admission of allegations of fact in plaint or such other material as Banking Court required in the interest of justice.
However , before passing decree in favour of plaintif f in a blindfolded fashion because of defendant' s failure in obtaining leave to defend the suit, allegations of fact in plaint must be examined critically and minutely by Banking Court so as to corroborate as to whether or not the same constituted as cause of action in favour of plaintif f, which would arise out of the facts pleaded/alleged in plaint. Provisions of Section 10(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001, were directory and not mandatory in nature because of the use of word "may" therein. Thereafter , the plaint of the suit was rejected by observing that from the averments made in plaint and in view of relevant admitted material on record, the facts averred and allegations made in plaint did not disclose any cause of action and also the plaintif f had no cause of action when the suit was instituted.
9. Prior to the case (2015 CLD 179) supra, the Lahore High Court in case reported as "Gulistan Textile Mills Ltd. v. Askari Bank Ltd. and others" (2013 CLD 2005 ) while considering the question whether plaint could be rejected by the Banking Court before considering application for leave to defend filed by the defendant held that the Banking Court had inherent power under order VII Rule 11 CPC to examine the plaint and reject it, inter alia, if the same did not disclose a cause of action as required by Section 9 Sub Section 1 & 2 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 ('Ordinance') and such power could be exercised at any stage of the suit irrespective of the fact that application for leave to defen d, or written statement had been filed by the defendant. It was further held that power of the Court under Order VII Rule 11 CPC read with Section 7(2) of the Ordinance preceded and prevailed over the power of the Court under Section 10 Sub Section 8 of the Ordinance.
10. In the case of "Imran Hussain v. Banker 's Equity Limited through Authorized Representative of the Official Liquidator and 13 others" (2019 CLD 272), the Sindh High Court while considering the judgments of Gulistan Textile Mills and Ark Garments Industries supra held that application under Order VII Rule 11 CPC for rejection of plaint was maintainable even prior to grant of leave to defend and a suit under the Financial Institutions (Recovery of Finances) Ordinance, 2001 could be examined per Order VII Rule 11 CPC and suit could be dismissed in case the same was barred by law . The relevant portion of the order is reproduced below: "We hereby affirm the case of National Bank of Pakistan and Gulistan Textile Mills Ltd. (supra) decided by this Court and learned Lahore High Court, respectively . We have briefly discussed both the above principles; namely , general principle that in a Suit under the Ordinance except for an application for leave to defend a defendant cannot file any other interlocutory application prior to the grant of leave to defend the Suit; and, with specific reference to rejection of plaint that even before hearing and deciding the application for leave to defend, maintainability of suit under the Ordinance can be examined and plaint can be rejected or the Suit can be dismissed in case the Suit is barred by law. We are of the considered view that the application filed in the instant case for rejection of plaint was maintainable under the former general principle and it ought to have been decided on merits at the relevant time as leave to defend had already been granted in the present case admittedly prior to the filing of the said application; and, unde r the latter principle also the said applica tion ought to have been decided on merits at the relevant time as the question of maintainability of the Suit on the ground of limitation was involved.
Therefore, with respect to the learned single judge, we say with all the humility that the observation in the impugned order that the application for rejection of plaint was not maintainable when issues had been settled and the matter was at the stage of evidence , was not correct, especially when the said application was filed on the ground that Suit was barred by limitation."
11. The collective reading of reasoning given in afore-referred judgments is that a plaint in a recovery suit in terms of Section 9 of the Ordinance is require d to disclose cause of action and failure to do not needful may lead to rejection of the plaint, which may also be rejected on the grounds if the plaint fails to conform to the mandatory requirements of the Ordinance or is otherwise found to be barred by law on the basis of averments of the plaint, irrespective of the fact that whether leave to defend has been obtained by the defen dant or not and such power can also be exercised by the Court suo motu. However , if the plaint is sought to be rejected on the grounds other than the averments of the plaint, i.e. on the ground of defence taken by the defendant or other material, the defendant is required to obtain leave to defend before his plea for rejection of plaint, such as, plaint being barred by res-judicata or limitation, matter having been earlier finally decided by some other competent authority (as in the present case by the Banking Mohtasib, Pakistan), on the basis of said facts, is considered.
12. Now the question arises that when the Banking Court is authorized to reject a plaint at any stage of the proceedings, at what stage it is empowered to entertain applications filed by the defendant other than the application for leave to defend.
13. In case reported as Messrs Qadoos Brothers Poultry Farms through Abdul Qadoos v. Judge Banking Court No.1 Gujranwala and others (2018 CLD 88) a Full Bench of this Court, while dilating upon the question whether Banking Court has the jurisdict ion to restore a suit or an application for leave to defend, which was dismissed for non-prosecution or the said order could only be challenged through appeal, observed that it is generally accepted position of law that filing of interlocutory applications in a suit under the Financial Institutions (Recovery of Finances) Ordinance, 2001 is barred pending decision of leave applications, save in exceptional circumstances and the Full Bench was pleased to hold that order of dismissal for non-prosecution is not a final order in terms of the Ordinance to be challengeable through appeal only and Banking Court had the necessary power and jurisdiction to allow an application to recall the said order and restore the suit/application for leave to defend, which was dismissed for non-pro secution on sufficient grounds being shown for non-appearance of the counsel/party in terms of Order IX, Rule 9, CPC.
14. The conclusion drawn from the said decision is that even before the decisio n of an application for leave to defend on merits, an application for its restoration may be entertained if the said application is dismissed for non- prosecution and as a necessary corollary it can be concluded that the bar on entertaining interlocutory applications during pendency of application for leave to defend is not absolute, as in exceptional circumstances a need may arise for filing such applications in a Bank ing suit, which the said Court may enter tain and pass necessary orders.
To hold otherwise may not be a proper approach to deal with the matter as all procedures are meant to advance the purpose of law and not to hamper the same on technicalities. For example, where summons are served upon defendant through bailiff or process server without a copy of plaint as required under Section 9(5) of the Ordinance, the defendant in the suit, in appropriate cases, may inform the Banking Court through an application about the same and pray that the same may be provided to him for filing of an application for leave to defend, even though the said section itself provides that a copy may be obtained without filing any such application if the service is made through any other mode.
15. In some other situation, the question may arise that although in a recovery suit filed by the Financial Institution a Banking Court is empowered under Section 16 of the Ordinance to pass orders of attachment of property , injunction and appointment of receivers on the application of the financial institution, whether it could be declared that it was precluded to pass order of injunction to save the property subject matte r of the finance from wastage on an application of the defendant, whether it be the Financial Institution or the customer , during the pendency of its/his application for leave to defend, when the Banking Court under Section 7 of the Ordinance is empowered with the powers vested in a Court by Code of Civil Procedure, 1908 and can exercise the same when there is no express provision to deal with the particular situation and there is no express bar in following the said procedure.
The obvious answer would be that the Banking Court had inherent jurisdiction to pass an appropriate orders in the given circumstances of the case. Reliance in this behalf is placed on "Gulistan Textile Mills Ltd and another v.
Soneri Bank Ltd. and another" (PLD 2018 Supreme Court 322) wherein it has been held that:- "Therefore, a Banking Court is to follow the procedure laid down in the C.P.C. in all matters with respect to which the procedure has not been provided for in the ordinance, whereas the procedure to prevent property which has been pledged or hypothecated etc. from being transferred, alienated etc. has been duly and exhaustively provided for in Section 16 of the Ordin ance (save for Section 16 (4) thereof). Therefore, to this extent the application of the C.P .C. has been excluded."
The conclusions drawn from the discussi on and judgments referred above are that (i). A plaintif f is not required to wait for the decision of an application for leave to defend before filing interlocutory applications which include and are not limited to application for interim injunctions, etc.; (ii) the defendant in ordinary circumstances is generally barred from filing interlocutory applications before decision of application for leave to defend; (iii). The bar on defendant on filing interlocutory applications during pendency of application for leave to defend though strict is not absolute and Banking Court has inheren t jurisdiction to entertain such application s in exceptional circumstances, which may, inter alia, include but not restricted to (a) an application for restoration of an application for leave to defend dismissed for non-prosecution, (b) an application for rejection of plaint, etc.; (iv) the application for rejection of plaint is a special kind of application, different from other interlocutory applications for the reason that the Court itself is vested with suo Motu powers to reject plaint at any stage in case it does not disclose cause of action, does not conform to the provisions of the Ordinance or is otherwise barred by law; (v) in cases the plaint shows cause of action, the plaint of suit may be rejected on the basis of the other material available on record or the defence taken by the defendant which ordinary is done after the application for leave to defend is decided; (vi) grounds taken in application for rejection of plaint may also be treated as a ground for grant of application for leave to defend, which has to be considered on its own merits and if the circumstances of the case so require, leave may be granted on the said grounds; and (vii) dismissal of application for leave to defend does not mean that the suit is to be decreed in all cases and the court retains the powers to reject the plaint of the suit or dismiss the same even thereafter if the plaintif f fails to make out a case for passing decree in the matter .
16. In view of what has been discussed above, it is concluded that the application for rejection of plaint can be filed at any stage of the proceedings as it is an application different from other interloc utory applications that generally cannot be filed by the defendant or entertained prior to decision of the applicatio n for leave to defend. Court is always vested with the power to reject the plaint at any stage of the proceedings, which power may also be exercised suo Motu, however , the said application is to be decided at appropriate stage keeping in view the grounds raised therein.
17. Here it is not the case of the petitione r that plaint did not disclose any cause of action, or does not conform to the mandatory conditions mentioned in the Ordinance or is barred by law on the face of the plaint, so as to decide the matter of rejection of plaint even prior to the decision of his application for leave to defend, rather case of the petitioner relates to matter having been finally adjudicated upon by the Mohtasib prior to filing of the suit and it is yet to be seen by the Banking Court whether adjudication by the Mohtasib precludes the Bank from filing suit before the Banking Court for recovery of finances or not, which can be determined at the time of deciding application for leave to defend wherein the said ground has been taken or deciding the application for rejection of plaint thereafter .
18. When confronted with the afore referred situation, learned counsel for the petitioner states that his contention is that learned Banking Court could not refuse to entertain/receive the application filed by the petitioner on the record, even if it could not decide the same before decision of application for leave to defend as the question of maintainability is entirely distinct from the question of entertaining the application as the petitioner could while seeking relief of leave to defend, place any document on the record and the application along with documents attached with the same could be at least retained on the record. Be that as it may, as nothing is available on the record to show with certainty whether the petitioner had actually tried to file the application for rejection of plaint and the same was not entertained by the Court, therefore, this court refrains itself from commenting upon the same. However , it is observed that the Banking Court even if did not deem it appropriate to reject the plaint summarily , could have allowed the petitioner to file the said application and retain the same for its decision at its appropriate stage.
19. At this juncture, learned counsel for the petitioner in the alternative states that he would be satisfied if while deciding the application for leave to defend, the Banking Court, Sahiwal, is directed to take into consideration the plea raised in the said application relating to matter having been decided at the level of Banking Mohtasib. The request of the learned counsel is tenable. The Banking Court, Sahiwal, while deciding the PLA filed by the petitioner shall take into consideration the afore-referred ground raised by the petitioner .
20. As regards the prayer of the petitione r that the order dated 22.10.2020 passed by the Banking Court allowing the respondent Bank to file reply to the application for leave to defend filed by the petitioner be set aside and the reply filed by the respondent Bank be discarded is concerned, the said order is an interlocutory order and this Court is not inclined to interfere in the same at this stage, the petitioner if advised may seek the said remedy at an appropriate stage.
21. In view of the above findings / observations, these writ petitions are disposed of.
In terms of the order of even date passed in connected W .P.No.374/2021, this petition is also disposed of.