1. ' This order would dispose of review application (C.MA. No, 566/90) moved by the plaintiff/bank and the application under Order 37, Rule 2(2) of the C.P.0 (C.M.A. No, 663/90) moved by the defendants 1 and 4 for leave to defend the suit.
2. ' The present suit was filed by the plaintiff/bank under section 7 of the Banking Companies (Recovery of Loans) Ordinance, 1979 (hereinafter to be referred as the Ordinance) for recovery of Rs, 11,15,604 from the defendants. The defendants were served through publication and subsequently the suit was decreed against them under a judgment dated 25-4-1989.
3. ' The defendants 1 and 4 moved on 17-5-1989 an application under Order 9, Rule 13 of C.P.C. For setting aside of the ex parte decree. Said application was, however, dropped on 30-5-1989.
4. Subsequently the defendants 1 and 4 moved another application (C.M.A. 112/90) on 30-5-1989 under Order 37, Rule 4, C.P.C. For setting aside of the ex parte decree passed on 25-4-1989. Said application was contested by the plaintiff but it was accepted under my order dated 21-2-1990.
5. Said order is sought to be reviewed under C.M.A. No, 566/90.
6. ' Mr. Muhammad Hanif, learned counsel for the plaintiff referred to Rule 8 of Banking Companies (Recovery of Loans) Rules, 1980 (hereinafter to be mentioned as Rules) which has provided three simultaneous modes of service and argued that service can be held good if the defendants are served by any of the three modes. It was further argued that the application for setting aside of the ex parte decree moved on 30-5-1989 was time-barred because such an application is to be moved within ten days. In support learned counsel for the plaintiff cited the cases of:
(i) Abdullah Arain v. National Bank of Pakistan PLD 1988 Kar.
7. 334.
(ii) Messrs Bank of Oman Limited v. Messrs East Asia Trading Co. Ltd. And others 1987 CLC 288.
(iii) Pakistan Insurance Corporation v. Grindlays Bank Ltd. And three others 1987 CLC 216.
(iv) Algemens Bank Nederland N.V. v. Ford Super Pakistan Ltd. And three others 1988 M LD 1058.
(v) Habib Bank Limited v. M/s. Waheed Textile Mills Ltd and others PLD 1989 Kar.
8. 371.
9. ' Mr. Nooruddin Sarki learned counsel for defendants Nos. 1 and 4 opposed the application for review. Relying on Rule 8 of the Rules, he argued that it was incumbent upon the Court to issue process for the defendants through three different modes simultaneously viz. Through bailiff, by registered post A/D and by publication. Learned counsel argued that in the instant case the process was never sent to the defendants by registered post A/D and consequently the penal provisions contained by Order 39, Rule 2(2) of C.P.C. Would not apply. It was further argued that the decree passed on 25-4-1.989 had to be set aside against all the defendants although the application for its setting aside was moved by defendants No,1 and 4 only because interest of the defendants was indivisible inasmuch as the defendant No,1 was borrower while the other defendants were guarantors.
10. ' Perusal of the record shows that the Additional Registrar had ordered process to be issued for the defendants through bailiff as well as through registered post and by publicator but the process was never sent to the defendants by registered post. Under an order dated 29-3-1989 the Additional Registrar has noted that the defendants were served through publication in Daily Leader and the summons sent to them through bailiff were returned unserved. After noting so the Additional Registrar held the service to be good. He did not mention anywhere in his order dated 29-3-1989 if the defendants were served or unserved by the process sent to them through registered post. I, therefore, agree with learned counsel for defendants No, 1 and 4 that there was no full compliance with Rule 8 of the Rules and consequently ex parte decree could not have been passed against the defendants under Order 37, rule 2(2) of C.P.C. In view of this observation it is not necessary to discuss the case cited at the Bar.
11. ' However, none of the authorities cited at the Bar lays down that in a case covered by the Ordinance process can be issued otherwise than as specified by section 7 of the Ordinance. In (i) above, trial Court held that on merits the defendant No,1 had no case and in the circumstances annlication for setting aside of the decree under Order 37, Rule 4 was dismissed by the trial Court and such dismissal was affirmed by a D.B. Of this Court. In (ii) above, the defendant took plea that the plaintiff/bank acted recklessly in granting heavy loan and the plaintiff-bank claimed to have made advances in the regular course of business in good faith against hypothecation of goods and deposit of title deeds and such facts were not rebutted through a re-joinder and the view taken was that the plea taken by the defendants would not help them for granting leave to defend.
(iii) In above, the view taken was that object of Rule 8 of the Rules is to ensure that service of summons and notices is effected without any delay and that attempt to effect service of summons or of notice is to be made by three simultaneous modes of service. This authority supports the contention raised by learned counsel for the defendants Nos.1 and 4. In (iv) above, the contention that the Ordinance was void ab initio was repelled. In (v) above, it was held that no legislation in our country can be tested and struck down by the Courts on the touchstone of the Objectives Resolution or Article 2-A of the Constitution of Pakistan or for that purpose, the principles of policy enshrined in our Constitution. It was also held in said case, that the laws in force in Pakistan permitting the plaintiff to charge interest on the principal amount due against the defendant must be given effect to.
12. Since there was no proper compliance with Rule 8 of the Rules, consequently service of the defendants could not have been held good on 29-3-1989. As such the decree based on the order dated 29-3-1989 was rightly set aside. Consequently the review application stands dismissed.
13. ' In respect of the other application, learned counsel for the plaintiff argued that the application for leave to defend was supported by the affidavit of defendant No,4 Sajjad Hussain and it was not supported by any affidavit of defendant No,1, who was the main party and that mortgage of the property was admitted and the documents filed with the plaint were not denied and no error was pointed out in the statement of accounts filed with plaint and as such leave to defend the suit cannot be granted. Mr. Nooruddin Sarki learned counsel for the defendants Nos. 1 and 4 argued that defendant No, 1 who was the principal borrower, was outside the country for preceding five years and as such his affidavit could not be filed in support of the application for leave to defend. It was further argued that the Bank authorities never sent Statement of Accounts to the defendant No,1 whose address had been changed. It was further argued that the plaintiff had charged interest which was un-Islamic. It was also argued that suit of the plaintiff was time-barred.
14. ' The defendants do not appear to have made out a case for being granted leave to defend the suit, except on account of claim of interest. It has not been stated in the affidavit of Sajjad Hussain if defendant No,1 did not sign any of the documents of loan or mortgage. In para. 4 of his affidavit Sajjad Hussain admitted that defendant No,1 had firstly obtained a loan of Rs,2,00,000 and subsequently he obtained another loan of Rs, 3,00,000 and that this was against securities.
15. According to the plaintiff the defendant No,1 applied for a loan of Rs,5,00,000 in 1983 and such loan was approved on 28-8-1983 and released on 30-8-1983. It has already been admitted that an amount of Rs,5,00,000 was taken as loan by the defendant No,1 from the plaintiff. Rest of the amount claimed is interest, in respect of which we have conflicting authorities. In this respect reference may be made to the case of Habib Bank Ltd. v Muhammad Hussain and others PLD 1987 Kar. 612 where it was observed that the provisions of the Negotiable Instruments Act and of the Civil Procedure Code so far as they relate to awarding interest on money claims, are clear violations of the Constitutional mandate, as provided in Article 2-A read with clause (3) of the Objectives Resolution. A different view was taken in the case of Habib Bank Ltd. v. M/s. Waheed Textile Mills Ltd.
16. And others PLD 1989 Kar. 371 where it was held that the Courts in Pakistan are under a moral and legal obligation to give effect to the law in force in Pakistan and that the laws in force in Pakistan permitting the plaintiff to charge interest on the principal amount due against the defendant, must be given effect to. In view of this controversy I grant leave to the defendants Nos.1 and 4 to defend the suit only in respect of claim of the plaintiff against the defendants on account of interest. Leave to defend the suit in respect of principal amount of Rs, 5,00,000 is refused. Consequently suit of the plaintiff is decreed for recovery of Rs, 5,00,000 as principal amount from the defendants jointly and severally. Costs would be determined after the question of interest is resolved. The suit would proceed in respect of the claim of the plaintiff on account of interest. Defendants Nos.1 and 4 to file written statement within a period of two weeks from the date this order is pronounced.