' This is a petition under Article 9 of the Provisional Constitution Order, 1981, whereby Sh.Muhammad Ramzan and Fayyaz Ahmad Khan, petitioners want this Court to declare the order, dated 16-5-1981 passed by the learned Special Judge, Banking Court-II, Lahore to be without lawful authority and of no legal effect.
2. The petitioners are defendants in the suit brought by Habib Bank Ltd., respondent No,2, herein, for the recovery of Rs,1,01,836.47.
3. The suit was filed under the ordinary procedure before the Civil Judge in January, 1978 and ordinary summons under section 27, C.P.C. Were issued to the defendants to appear and answer the plaint. The defendants appeared, and filed written statements. It appears that the case was pending before the learned District Judge when the Banking Companies (Recovery of Loans)
Ordinance, 1979 (hereinafter called the Ordinance) was promulgated and by virtue of section 6 subsection (4), the suit stood transferred to the Special Court, Lahore established under section 5 of the Ordinance. The record, however, shows that the plaint was returned on 19-3-1980 for presentation before a competent Court. The order, dated 12-5-1980 of the learned Special Court indicates that the case had been received in his Court from the Court of the learned District Judge, Muzaffargarh. Notice to the respondent/ petitioner, dated 5-2-1981 reads as follows:- {{URDU TEXT}} ' The learned Special Judge on 16-5-1981 passed the following order:- {{URDU TEXT}}
3. Before me, Mirza Manzur Ahmad learned counsel for the petitioners has attacked this order of the Special Court granting leave to defend the suit on payment of the entire amount of Rs,1,01,836.47. It is urged before me, that the order is illegal, of no legal effect and in any case, in the circumstances, unconditional leave to defend ought to have been granted. The learned counsel has raised the following points:-
(i) That the suit having been filed long before the promulgation of Banking Companies (Recovery of Loans) Ordinance, the Special Court respondent No,1 was not competent to pass the impugned order under Order XXXVII, rule 3, C.P.C. Without first having issued summons in Form 4 of Appendix B under Order XXXVII, rule 2, C.P.C.; and
(ii) that the Special Court respondent No,1 was not competent to pass the impugned order without any application by the defendants.
4. On the other hand, Pirzada Muhammad Saeed, 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 reason 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. Reliance is placed on International Food Centre Limited v. The United Bank Limited and 2 others 1982 CLC 108.
5. I have gone through the material placed on the 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 interfered with for the following reasons:-
(i) It is illegal and passed in excess of jurisdiction because the condition precedent for the grant of leave to defend the suit i.e. The summons in Form 4 of Appendix B which should have been issued to enable the defendants to move an application supported by an affidavit as contemplated by rule 3 of Order XXXVII, C.P.C. To seek leave to defend the suit were not issued by the Special Judge. It is to be noted that under rule 2 of Order XXXVII C.P.C., no other form has been prescribed so far.
Form 4 of Appendix B is as follows:- "SUMMONS IN SUMMARY SUIT ON NEGOTIABLE INSTRUMENT (0. 37,r.2)
(Title)
(Name, description and place of residence)
' WHEREAS has instituted a suit against you under Order XXXVII of the Code of Civil Procedure, 1908, for Rs, ......Balance of principal and interest due to him as the...... ...Of a... ... ,.. ...Of which a copy is hereto annexed you are hereby summoned to obtain leave from the Court within ten days from the service thereof to appear and defend the suit, and within such time to cause an appearance to be entered for you. In default whereof the plaintiff will be entitled at any time after the expiration of such ten days to obtain a decree for any sum of Rs, ... ... ...And the sum of Rs, ... ...For costs together with such interest, if any, from the date of the institution of the suit as the Court may Order.
' Leave to appear may be obtained on an application to the Court supported by affidavit or declaration showing that there is a defence to the suit on the merits, or that it is reasonable that you should be allowed to appear in the suit.
' Given under my hand and the seal of the Court, this...The day of...19 JUDGE."
ORDER XXXVII, rule 2, C.P.C. Reads as follows:-- "(1) All suits upon bills of exchange, hands or promissory notes, may, in case if plaintiff desires to proceed hereunder, be instituted by presenting a plaint in the form prescribed; but the summons shall be in Form No,4 in Appendix or in such other form as may be from time to time prescribed.
(2) In any case in which the plaint and summons are in such forms, respectively the defendant shall not appear or defend the suit unless he obtains leave from a Judge as hereinafter provided so to appear and defend; and, in default of his obtaining such leave or of his appearance and defence in pursuance thereof, the allegations in the plaint shall be deemed to be admitted, and the plaintiff shall be entitled to a decree. Rule 3 is as follows:- "3(1) The Court shall, upon application by the defendant, give leave to appear and to defend the suit, upon affidavits which disclose such facts as would make it incumbent on the holder to prove consideration, or such other facts as the Court may deem sufficient to support the application.
(2) Leave to defend may be given unconditionally or subject to such terms as the payment into Court, giving security, framing and recording issue or otherwise as the Court thinks fit."
There is no denying that the Banking Companies (Recovery of Loans) Ordinance is a special law and was enacted for the purpose of providing a speedy and efficacious method for the recovery of loan advanced by the Bank and for this purpose summary procedure has been made applicable by subsection (2) of section 7. Under sub-rule (2) of rule 2 of Order XXXVIII, C.P.C. The defendant cannot defend the suit unless leave is granted to him, but I am of the opinion that when special law provides for a special procedure for doing a thing in a particular manner such thing should be done in that manner or not at all, that the procedure is imperative and the condition laid down in rule 2 of Order XXXVII, C.P.C. Is the condition precedent to conferring jurisdiction upon the Court to consider the question of grant or refusal of leave to defend the suit and that the learned Special Court could grant leave upon the application for leave to defend by the defendant supported by an affidavit and not otherwise.
' It is arbitrary because the impugned order shdws that the same has been 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 no 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 condition which, undoubtedly, is to be exercised judiciously and not arbitrarily and the conditions should accord with the situation. If the loan is ...Appeal or 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 order 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 ones and these accord with the situation. I am of the opinion that in case the trial. Court intends to impose extreme condition i.e. The 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 and the propriety of the condition of payment into the Court of the entire amount. In this case, unfortunately, I find that the impugned order has been passed without going through the plaint, the written statements and without reading Order XXXVII, rules 2 and 3, C.P.C. Carefully and the learned Specie Court has passed the impugned order as a matter of course in violation of the principles governing the exercise of judicial discretion.
' For the foregoing reasons I am of the view that the impugned order is illegal having been passed in violation of law and principles governing the exercise of jurisdiction.
6. Learned counsel for the respondent states that in spite of this finding 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. The United Bank Limited and 2 others P. L J 1981 Lah.
465.
7. I have gone through the judgment referred to above. I find that the same is based on altogether different facts. I am of the considered opinion that if this Court is satisfied that an interlocutory order suffers from infirmities affecting the jurisdiction of a Court then it would be failing in its constitutional duties to refuse to interfere and allow a Court to pass illegal orders under the cover of Special Law because once the Court comes to the conclusion that the Court has exceeded 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, then it would be the duty of this Court while sitting in its constitutional jurisdiction to strike down such order regardless of the fact that the interference may defeat the legislative intent i.e. The speedy and efficacious method for the recovery of loans advanced by the Bank. I realise the difficulty but at the same time sitting as a Court of law, this Court cannot permit a Court or Tribunal to act in a manner in which the learned Special Judge has acted by passing impugned order in a suit for the recovery of a huge amount.
8. The result is that this 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 a direction to the Special Court to apply its mind to the legal and factual aspects of the matter and decide the suit in accordance with law. No order as to costs.